AMA Warns Health Insurance Mergers Will Drive Up Patient Costs

Photo (cc) by 401(K) 2013

Four of the biggest health insurance companies in the country are proposing to unite in two separate mergers, a controversial move that the American Medical Association says will not only hurt the quality of care provided in the United States but will lead to higher costs for patients.

According to a new study by the AMA, the proposed Anthem-Cigna and Aetna-Humana mergers would squash competition in local insurance markets in many states.

The AMA maintains that the mergers would “exceed federal antitrust guidelines designed to preserve competition” in many states and increase market power in 97 metro areas in 17 states.

The U.S. Department of Justice says “a merger enhances market power if it is likely to encourage one or more firms to raise price, reduce output, diminish innovation, or otherwise harm customers as a result of diminished competitive constraints or incentives.”

The AMA said the proposed mergers would also shrink competition in additional markets — in total, significantly lowering competition in 154 metro areas in 23 states.

“A lack of competition in health insurer markets is not in the best interests of patients or physicians,” AMA president Steven J. Stack, said in a statement. “If a health insurer merger is likely to erode competition, employers and patients may be charged higher than competitive premiums, and physicians may be pressured to accept unfair terms that undermine their role as patient advocates and their ability to provide high-quality care.”

Anthem wants to buy Cigna in a $54 billion deal, CNN Money reports. Aetna has proposed purchasing Humana for $37 billion.

If federal regulators approve the two proposed mergers, the majority of the nation’s private health insurance would come from three major insurers.

The American Hospital Association has similar concerns with the mergers, The New York Times reports. In a recent letter to the Justice Department, the AHA said the Aetna-Humana merger would diminish competition for private Medicare Advantage plans, which thereby “threatens serious and widespread competitive harm” to Medicare beneficiaries.

The AHA said about 30 percent of the 55 million Medicare beneficiaries are enrolled in Medicare Advantage plans.

Although some insurers and economists have denounced the criticism as nothing more than a fear by doctors and hospitals that their payments will be cut, the Times reports that the Government Accountability Office has produced similar findings to the medical and hospital associations.

The insurance companies claim the mergers will allow them to increase health care efficiency, which will lead to cost savings.

Melinda R. Hatton, senior vice president of the AHA, told the Times that although that may be the case, there is no guarantee that the insurers would pass those savings on to consumers.

What do you think of the proposed health insurance company mergers? Share your thoughts below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

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