Payers, Providers Debate Health Plan Consolidation Before Congress

In the second hearing this month to review competition in the healthcare marketplace, the CEOs of Aetna and Anthem and executives of the American Hospital Association told lawmakers about the benefits and perils of health plan mega-mergers.

A House subcommittee on Tuesday heard the pros and cons of two proposed mega-mergers involving four of the nation's largest health insurers.

In the second hearing this month to review competition in the healthcare marketplace, the Subcommittee on Regulatory Reform, Commercial and Antitrust Law heard from a table of payers and providers, including Mark Bertolini, chairman and CEO of Aetna Inc., and Joseph R. Swedish, president and CEO of Anthem Inc.

Last week Bertolini and Swedish told Senators that "robust choice and competition will remain in the Medicare market."

They delivered a similar message Tuesday when the House subcommittee asked for an explanation of the benefits or perils of health plan mega-mergers.

"The acquisition of Humana is about bringing together two companies that are highly complementary," Bertolini said in prepared remarks. "Aetna has traditionally been a large commercial health insurance company while Humana has been a large Medicare company known for its leadership and expertise in Medicare."

Aetna's $37B Humana Acquisition Has Providers Wary

"After the acquisition, Aetna will have a product portfolio balanced more evenly between commercial and government products such as Medicare and Medicaid. While this deal is primarily about Medicare, coming together will enable us to offer more consumers a broader choice of products and access to higher quality and more affordable health plan options."

Swedish told the subcommittee that Anthem's proposed merger with Cigna comes at a time when "health insurance is flush with competition."

"The number of health insurers increased by 26% in 2015 with 70 new entrants offering coverage," Swedish said in prepared remarks. "Increased competition in insurance means more choices for consumers. Further, when considering the various segments that make up health insurance, individual, small group, international, larger employer, Medicare Advantage, Medicaid, etc., it is apparent that this transaction will result in minimal shared local markets both geographically and by product segment."

Tom Nickels, executive vice president of the American Hospital Association, told the subcommittee that any benefits coming from the concentration of the health insurance industry would "pale in comparison to the enduring harm the deals could impose on healthcare consumers and providers."

"Among the claims that the insurers make to defend the acquisitions of their closest competitors are that the companies are complementary without significant overlaps and/or allow them to extend to lines of business they could not enter otherwise," Nickels said.

"These claims have— and should have —been met with significant skepticism. That also is true of their statements declaring that all healthcare is 'local,' followed by a recitation of national statistics on the number of supposed competitors to imply that there is more than sufficient competition in local markets. However, this is not the case. If all healthcare is local, then only the competitors in a particular local market count in assessing the anticompetitive impact of the deal. Our analyses… show that more than 800 markets for the Anthem deal and more than 1,000 markets for the Aetna deal lack sufficient 'local' competitive alternative."

American Medical Association President-elect Andrew W. Gurman, MD, told the committee that the nation's health insurance market was already heavily consolidated and that the proposed Anthem/Cigna and Aetna/Humana mega-mergers would just make things worse for consumers and providers.

Gurman cited AMA analyses released this month showing that the combined impact of proposed mergers would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states.

"We are at a critical decision point on health insurance mergers, because once consummated, there is simply no going back,"Gurman said in prepared remarks. "Post-merger remedies are likely to be both ineffective and highly disruptive.  You can't unscramble an egg.  Thus, we believe that the time for heightened scrutiny and careful consideration is now, before proposed mergers take effect and patients are irreparably harmed. The solution lies in more, not less, competition."