AETNA-PRU: Deal Likely to Clear DOJ Despite Concerns
Irrespective of a deluge of evidence from consumer advocates and physicians who charge that Aetna Inc.'s purchase of Prudential Health Care would represent a harmful concentration of market power, federal antitrust officials say they have "found potential problems in only a few states," the New York Times reports. The $1 billion deal would create a behemoth that would supply health benefits for 1 in 10 Americans. Consumer advocates are arguing that patients' rights legislation would be "an empty gesture if federal officials ignore the growing concentration of the managed care industry." And the Times reports that the regulators' decision as to whether to block the sale will likely determine the course of future consolidation of the industry. Thus far, all signs point to DOJ regulators -- at most -- requiring divestiture of Aetna or Prudential plans in certain markets, but such a move "would not stop the merger," according to health care antitrust expert William Kopit.
Look Out, Docs
Consumers for Quality Care Director Jamie Court said, "The Justice Department has railed against physician unionization as a threat to free-market competition. But the administration has failed to break up a single HMO merger. If Aetna is allowed to buy Prudential Health Care, the resulting company would be in a powerful position to grind its payment rates so low that physicians could not adequately care for patients." Indeed, the American Medical Association has been among the harshest critics of the merger. But the Justice Department is using a different test. Rather than focusing on Aetna's projected share of the HMO market -- which would range up to 59% in some regions -- regulators are examining the health insurance market as a whole, on the theory that employers and consumers can flee to PPOs or indemnity insurance. The Times reports that "the effect on doctors [is] a secondary concern for [regulators], since the main purpose of the antitrust laws is to protect consumers." Also at issue: The all-or-nothing clause in Aetna's standard contract, which requires participating physicians to see patients in all of the company's plans. The Nevada Insurance Commissioner recently ruled the practice "coerced doctors to sign contracts against their will" (Pear, 4/30).