Recently announced health insurance company acquisitions should be closely scrutinized, because they “would leave consumers with fewer – and no doubt – more expensive options for coverage … and diminish the insurers’ willingness to be innovative partners with providers and consumers to transform health care,” AHA President and CEO Rick Pollack Sept. 10 told a House Judiciary Committee panel.
The hearing on the state of competition in the health care marketplace occurred two months after Aetna said it would buy Humana and Anthem announced plans to buy Cigna, deals that could bring the number of publicly-traded health insurance giants from five to three.
“We have serious concerns about [the acquisitions] and believe they merit the greatest scrutiny from both the Department of Justice’s Antitrust Division and Congress,” said Pollack, who assumed the AHA’s top leadership post on Sept. 1.
Testifying before the House Regulatory Reform, Commercial and Antitrust Law Subcommittee, Pollack drew a sharp contrast between the realignment taking place in the hospital and health system field and the consolidation proposed in the health insurance industry. He said hospital realignment enables hospitals to provide patients with what they want and demand – care that is better managed, more coordinated and focused on keeping them well.
But the proposed mega-insurer mergers “appear motivated by top-line profits,” Pollack stated in his prepared testimony for the subcommittee. “The market concentration threatened by the pending insurance deals is large and durable, and consumers and providers are at risk if the deals are allowed to move forward.”
Pollack described how a changing health care landscape has hospitals building collaborative teams that are improving the coordination of care. He gave examples of how hospitals are partnering with other health care providers and experimenting with new ways to provide care where people live and work – not just at the local hospital.
He also cited a recent study in the Journal of American Medical Association that showed what the lead author called a “jaw dropping” decline in hospitalization rates and inpatient spending per Medicare beneficiary aged 65 and older between 1999 and 2013.
“Hospitals are coming together with other providers to provide patients with high-quality, well-coordinated care, and it is contributing to lower cost growth,” Pollack told the House panel. “On the other hand, the recently announced commercial insurance deals will not benefit consumers,” but the insurers themselves by further consolidating an “already highly concentrated health insurance market.”
Pollack’s testimony capped a recent flurry of AHA activity on the issue of health insurance acquisitions.
AHA submits comments on proposed health insurance consolidations. In a Sept. 1 letter to the Department of Justice and Department of Health and Human Services, the AHA said Aetna’s proposed acquisition of Humana and Anthem’s proposed acquisition of Cigna “have the very real potential to reduce competition substantially, increase the cost of premiums,” and make insurers less likely to collaborate with providers and others on building a continuum of care to meet consumer needs.
The letter focused on Aetna’s proposed acquisition of Humana. AHA Senior Vice President and General Counsel Melinda Hatton wrote that the deal “raises particular concerns about an adverse impact on the Medicare Advantage program,” noting that “more than 2.7 million seniors are enrolled in Medicare Advantage plans operated by the companies in more than 1,000 markets that would become highly concentrated.”
“The substantial barriers to entry in the health insurance sector make it extraordinarily unlikely that existing firms could replicate the size and scope of the insurers involved in this proposed transaction," Hatton wrote. “This strongly suggests that the acquisition likely would serve only to exacerbate problematic coverage and cost trends as well as produce other adverse impacts on access and innovation. Significantly, it appears doubtful that divestitures alone would remedy the loss of competition threatened by this acquisition.”
This did not mark the first time the AHA has expressed concerns about the recent insurer mega-mergers. The AHA also wrote to the DOJ’s antitrust division on Aug. 5 about the proposed Anthem-Cigna deal.
AHA letter in WSJ sets record straight on insurance mega-deals. In a letter published Sept. 2, the AHA says an Aug. 27 article in the Wall Street Journal wrongly states that the insurance megadeals will be good for consumers because they will force hospitals to lower prices. “Despite fears that hospital mergers would raise costs, hospital price growth is at a historic low, down to 1.4% in 2014 from 2.2% in 2013 – the slowest rate since 1998,” wrote Pollack. “Yes, hospitals are working together in new ways, and those transactions are motivated by structural changes in the market designed to improve access and affordability for patients. The benefits to consumers of these structural changes are obvious.”