DOJ Sues to Block Health Insurer Mergers

Two potential health plan mergers have come under intense fire. Last month, the U.S. Department of Justice (DOJ), acting under the direction of the U.S. attorney general and the states of Delaware, Florida, Georgia, Illinois, Iowa, Pennsylvania, Virginia, and Ohio, as well as the District of Columbia, brought a civil antitrust action to prevent the Aetna-Humana merger from going through. The government also sued to enjoin Anthem from acquiring Cigna. TMA and organized medicine have been scrutinizing the proposed mergers, which physicians say would profit insurers while leaving doctors and patients with fewer choices and higher costs. Aetna seeks to acquire Humana Inc. in a $37 billion deal focused largely on buying up Humana's Medicare Advantage business, while Anthem Inc. looks to take over Cigna for $50 billion. 

The DOJ Aetna-Humana complaint states the proposed merger "would lead to higher health insurance prices, reduced benefits, less innovation, and worse service for over a million Americans." A comprehensive American Medical Association analysis (login required) backs up that contention. AMA found the Aetna-Humana merger in particular would have a significant impact across Texas — and 13 other states — likely enhancing Aetna's market power to concerning levels per the federal government's own standards. 

Physicians worry that consolidation raises insurers' leverage over negotiated rates with physician practices, more than half of which in Texas and across the nation are small groups, according to TMA and AMA research. "Competition to attract consumers causes insurance companies to offer lower premiums, improved benefits, more attractive networks of doctors and hospitals, and more effective care management," the DOJ’s Aetna-Humana complaint says.

In TMA's October 2015 letter to DOJ opposing the Aetna-Humana deal, Joseph S. Valenti, MD, then-chair of TMA's Council on Socioeconomics, expressed concern that other dominant insurers don't benefit from the Aetna-Humana deal. In the past, medicine successfully advocated that DOJ, which oversees antitrust issues, force merging insurers to sell off some of their combined business to a third party to reduce their market power. If federal regulators follow that prescription, TMA strongly opposes any partial acquisition by large players with significant market control.

TMA's letter to DOJ cautions, too, against anticompetitive effects in Texas' Medicare Advantage market, pointing out the newly combined entity would control 36 percent of that business across the state. The government's complaint against Aetna and Humana delves into the impact the merger would have on seniors who rely on Medicare Advantage plans. "Aetna's attempt to buy Humana undermines the central role that competition is meant to play in Medicare Advantage and on the public exchanges in holding down health care costs and improving quality for seniors, families, and individuals," DOJ wrote. "If permitted to proceed, Aetna's purchase of Humana likely would lead to higher prices and reduced benefits for seniors, families, and individuals."

For more information, read "Bigger Isn't Always Better" in the December 2015 issue of Texas Medicine

Action, Aug. 1, 2016

Last Updated On

October 10, 2016

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