Congress scrutinizes Aetna-Humana and Anthem-Cigna deals

Washington – Congressional Republicans are blaming the Affordable Care Act for a wave of mergers and consolidations by hospitals, pharmaceuticals and insurers, which, they say, are costing consumers money and choice.

That new interest in consolidation in the health care field is bringing unwanted political attention to the proposed Aetna-Humana and Anthem-Cigna mergers, which came under congressional scrutiny Thursday.

“In 2010, President Obama signed into law the Patient Protection and Affordable Care Act, which I believe is antithetical to competition,” said House Judiciary Committee Chairman Robert Goodlatte, R-Va. “Rather than promoting free markets, Obamacare put in place a regulatory structure that stifled competition and instituted incentives for increased market consolidation.”

Goodlatte held a hearing Thursday to review health-care industry consolidation. Although it did not focus on proposed mergers by Aetna and Humana and Anthem and Cigna — a hearing in the committee later this month will focus exclusively on that — it provided the first opportunity for opponents of the mergers, including the American Hospital Association and the American Medical Association, to officially register complaints.

“Those deals appear motivated by top-line profits,” said Rick Pollack, president and CEO of the American Hospital Association, in written testimony. “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. The two deals promise fewer choices for consumers for commercial insurance and Medicare Advantage plans, narrower networks of providers in what few choices remain, and higher premiums and out of market cost, among other things.”

Thomas Greaney, director of the Center for Health Law Studies at St. Louis University said “evidence of the effect of market concentration in commercial insurance markets, although not as robust as for hospital markets, also indicates that insurance mergers have led to higher premiums for consumers.”

“Retrospective studies of health insurance mergers have found significant price increases following consolidation,” Greaney said.

Yet Aetna spokeswoman Cynthia Michener said, “The businesses that will lead health care in the future will not be the biggest, they will be those offering the best products and services.”

Aetna has struck a deal to buy Humana for $37 billion, which would cover 33 million members. Anthem, a Blue Cross and Blue Shield insurer, wants to buy all of Cigna’s shares in a cash and stock transaction that would cost $54 billion and cover 53 million members.

The future of both deals is now in the hands of the Justice Department’s anti-trust division and the Federal Trade Commission. Those regulators face a complex review process given the size of the insurers and the markets they serve.

The insurers involved in the mergers, backed by the American Health Insurance Plans (AHIP), a health insurer association, say the mergers will result in better health care quality and lower costs.

“Together, Anthem and Cigna, who have limited overlap in a highly competitive industry, will be in a better position to improve consumer choice and quality,” Anthem said in a statement. “ Most of all, we will be better able to lead the transition to value-based care that will reduce costs while improving health outcomes.”

But the American Medical Association released a report this week that said the pending insurance deals would drastically lessen consumer health plan choices in 154 metropolitan areas within 23 states.

The report also said the proposed  Anthem-Cigna merger “would diminish competition in up to 111 metropolitan areas within all 14 states that Anthem currently operates,” including Connecticut, Maine, New Hampshire and New York.

AHIP counters that the AMA study is “fatally flawed.”

“Once again, the AMA is recycling misleading data that does not accurately reflect the market today,” said AHIP spokeswoman Clare Krusing. “This latest analysis derives from the same fatally flawed study that has consistently been debunked by leading health care economists. Families and employers in every state have multiple choices of both insurance plans and types of coverage.”

Nevertheless, opposition to the mergers is mounting.

“We commend today’s hearing and other efforts by Congress and federal regulators to conduct a thorough examination of the significant consolidation occurring in the health care marketplace, perhaps most notably the proposed Anthem-Cigna and Aetna-Humana mergers,” the National Community Pharmacists Association said in a statement released Thursday. “Policymakers cannot allow the ‘merger mania’ gripping the nation to proceed in a way that harms patients and the community pharmacists who serve them.”

Merging with Humana would give Aetna more than one-quarter of the total Medicare Advantage market, analysts say.

At the Judiciary Committee’s hearing, Barbara L. McAneny, a member of the AMA’s Board of Trustees, said there are “fewer and fewer” Medicare Advantage plans.

McAneny said she’s seen consolidation result in plans “where (a patient’s) primary care doctor is on one plan and the specialist is on another.”

Aetna disagrees.

“In the Medicare space – which is the focus of Aetna’s proposed acquisition of Humana – beneficiaries are now able to choose from an average of 18 Medicare Advantage plan options, in addition to traditional fee-for-service Medicare,” Michener said. “Given all of these options, 92 percent of Medicare beneficiaries choose an insurer other than Aetna or Humana.”

Sounding an anti-competitive siren

Goodlatte said he wanted to “sound the siren on Obamacare’s anti-competitive practices.”

Republicans like Goodlatte say the ACA places so many burdens and new costs on the health care industry that mergers are necessary for them to survive economically.

But witness Greaney of the Center for Health Law Studies at St. Louis University said consolidation in the health care field has been on the march since long before passage of the ACA.

“Nothing in the ACA encourages consolidation,” he said.

Greaney was also skeptical that any benefits would come to consumers through consolidation, calling those arguments by “big insurers and big hospitals” the “sumo wrestling theory.”

To help fight back against critics and win federal approval of its merger with Humana, Aetna has recently hired four high-powered Washington lobbying firms. Cigna has also beefed up its lobbying in Washington, hiring three new D.C. lobbying firms to press its case to merge with Anthem.

In addition, Marilyn Tavenner, formerly a top health care official in the Obama administration, began a new job last week as chief executive of America’s Health Insurance Plans in Washington.

 

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