Archives for September 23, 2016

AMA warns of drastically reduced competition if mergers allowed

More competition is needed in the health insurance markets, a premise supporting the efforts to block the merger of four of the nation’s biggest health insurance companies, according to an analysis by the American Medical Association (AMA). Anthem’s acquisition of Cigna and the merger of Aetna and Humana would essentially eliminate competition in 24 states. The Department of Justice filed suit in July to challenge the two mergers (see DOJ lawsuit steps in between Aetna-Humana and Anthem-Cigna mergers, Health Law Daily, July 21, 2016).

Competition in health insurance markets

The AMA assessed the anticompetitive impact of the potential mergers in “Competition in Health Insurance: A Comprehensive Study of U.S. Markets,” which is based on 2014 data captured from commercial enrollment in fully and self-insured health maintenance organizations (HMOs), preferred provider organizations (PPOs), and point-of-services (POS) plans. The analysis found a significant absence of health insurer competition in 71 percent of the metropolitan areas studied. In 40 percent of the metropolitan areas studied, a single health insurer had at least a 50 percent share of the commercial health insurance market. In 14 states, a single insurer had at least a 50 percent share of the commercial health insurance market.

Specifically, the Anthem-Cigna merger stands to quash competition in 121 metropolitan areas throughout 14 states. Nine of the states are attempting to block the merger, but Indiana, Kentucky, Nevada, Ohio, and Wisconsin have not yet taken a position. The Aetna-Humana merger would shut down competition in 57 metropolitan areas in 15 states. Only four states have acted to block the merger, but Arizona, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Tennessee, Texas, Utah, West Virginia, and Wisconsin have not yet taken a position.

“The AMA analyses show that Anthem-Cigna and Aetna-Humana mergers would significantly compromise market competition in the health insurance industry and threaten health care access, quality and affordability,” said Andrew W. Gurman, M.D., president of the AMA. “With existing competition in health insurance markets already at alarmingly low levels, federal and state antitrust officials have powerful reasons to block harmful mergers and foster a more competitive marketplace that will operate in patients’ best interests.”

Highlight on Idaho: Premiums are higher, but state retains five insurers on exchange

Health insurance rates are increasing by 24 percent in Idaho for 2017, according to the state’s Department of Insurance (DOI). The increases affect both individual and small group health plans and follows the trends seen across the country.

Rising premiums

On Idaho’s health insurance exchange, where 95,000 state residents are enrolled and 90 percent are eligible for a premium tax credit under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), consumers may chose form five carriers and 196 medical plans, depending on the part of the state. The DOI reported increases in all plans. Weston Trexler, DOI product review bureau chief, told KTVB that the growing premiums are driven by claims.

“Anytime that an insurance company is paying out more claims than premium collected, they’re operating at a loss,” Trexler said. “Claims in this new marketplace have been higher than the carriers originally expected.” Trexler also noted that costs for services and rugs go up every year, and health insurance premiums must change to account for the increase.

Rate review

The DOI stated that carriers filed initial requests for rate review in May but were allowed to submit revised requests based on federal risk adjustment payment requirements released in July. From there, the DOI took public comment and determined whether the requested rate increases were reasonable based on claims experience, premiums, network provider agreements, administrative, and other costs. Most carriers agreed to reduce their revised requests after they had been reviewed, and the DOI could not find the rate increases unreasonable.

“While other states have seen dramatic reduction in carriers participating on their health insurance exchanges, the good news for Idaho is that we continue to have robust choice with five carriers and 186 medical plans in Idaho with at least four companies in every county,” said DOI Director Dean Cameron. “More choice leads to more competition, which should lead to lower premiums.