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.”