Health Care Experts, Lawmakers Spar Over Proposed Insurer Mergers
Health care professionals during a House Judiciary Antitrust Subcommittee hearing on Thursday sparred over the Affordable Care Act's effects on mergers in the health insurance industry, Modern Healthcare reports (Herman, Modern Healthcare, 9/10).
The subcommittee is investigating competition in the industry and how it would be affected by proposed mergers between Aetna and Humana, as well as between Anthem and Cigna (Pear, New York Times, 9/10). The Senate and House each will hold separate hearings focused on the proposed deals later this month. In Thursday's hearing, lawmakers more broadly considered how the ACA is affecting consolidation (Modern Healthcare, 9/10).
In July, Anthem announced that it agreed to acquire Cigna for $48.4 billion. The combined company would have about 53 million customers, which would make it the nation's largest insurer in terms of enrollment (California Healthline, 7/27). Also in July, Aetna announced it reached a $37 billion deal to purchase Humana, which could make Aetna the nation's second-largest insurer (Aetna release, 7/3). Federal regulators must approve the proposals, and antitrust experts say the Department of Justice and state attorneys general are likely to closely scrutinize them (California Healthline, 9/8).
Witnesses Debate Effects of Mergers
Daniel Durham, executive vice president at America's Health Insurance Plans, during the hearing said that consolidation in the health insurance industry could reduce costs by promoting competition (New York Times, 9/10). He noted, "Many mergers and acquisitions are beneficial to consumers" (Modern Healthcare, 9/10). Durham added that insurers are trying to offset the "harmful impact of consolidation among hospitals and other health care providers," noting that hospital mergers can lead to higher prices and increased premiums (New York Times, 9/10).
American Hospital Association CEO Rick Pollack defended hospital mergers, noting that it is difficult for some hospitals to comply with the ACA's shift toward value-based payments without joining forces. "Many small, stand-alone and rural hospitals are particularly in need of partners," Pollack said (Modern Healthcare, 9/10). He added, "The annual growth in hospital prices has been low and declining," despite mergers among the providers.
Meanwhile, Thomas Greaney, an expert on health and antitrust law at St. Louis University, argued that even if a major insurer can negotiate better prices, "it has little incentive to pass along the savings to its policyholders."
Further, Barbara McAneny, a trustee of the American Medical Association, testified that "the concentration of market power among a handful of nationwide insurers" could hinder providers' capability to care for patients, which could threaten the "health and safety of American patients."
Lawmakers Debate ACA
During the hearing, several House lawmakers expressed interest in the mergers, but they did not express clear support of or opposition to the proposed deals, the Times reports (New York Times, 9/10). Instead, Republicans used the hearing to criticize the ACA, while Democrats expressed support for the law (Modern Healthcare, 9/10).
For example, Judiciary Committee Chair Robert Goodlatte (R-Va.) said the ACA "put in place a regulatory structure that stifled competition and instituted incentives for increased market consolidation."
Rep. Hank Johnson (D-Ga.) countered that the ACA "is a reaction to, not a cause of, consolidation in the health care marketplace," adding, "Waves of consolidation among health care providers and insurers occurred long before the" ACA was implemented (New York Times, 9/10).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.