Proposed Mergers Could Increase Health Insurance Costs in 23 States

By Amelia Pang, Epoch Times
September 8, 2015 Updated: September 8, 2015

The proposed mergers of four of the largest health insurance companies in the United States— Anthem with Cigna, and Aetna with Humana—will likely diminish health insurance competition in 23 states, according to an analysis by the American Medical Association.

The AMA, the largest physician group in the country, released a report on Sept. 8 explaining how these mergers could greatly increase premium costs and negatively impact the quality of healthcare in states such as New York, California, and Texas.

“A lack of competition in health insurer markets is not in the best interests of patients or physicians,” AMA President Steven J. Stack, M.D., said in the press release.

When there is an absence of competition, employers and patients will likely pay higher premiums.

According to the U.S. Department of Justice’s Horizontal Merger Guidelines, “a merger … 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.” 

“Physicians may be pressured to accept unfair terms that undermine … their ability to provide high-quality care,” Stack said.

A shortage of competition already exists in most local health insurance markets. According to the AMA’s recent study, 46 states have two health insurers with at least a 50 percent share of the commercial health insurance market.

There are currently five major national health insurance carriers. After the mergers, there will only be three.

There are currently five major national health insurance carriers. After the mergers, there will only be three.

But not everyone in the medical field is worried about the mergers. 

Peter Lee, the executive director of California’s health benefit exchange, told the New York Times that the mergers of health plans may counterbalance the growing power of health care providers.

“I am far more concerned about the consolidation of hospital and physician groups than the consolidation of health plans,” Lee told the New York Times

According to the Obama administration, more than 16 million uninsured people gained coverage after major provisions of the Affordable Care Act took effect. But critics argue it is precisely the costly regulations of the Affordable Care Act that are causing health insurers to merge. 

Modern Healthcare reports that insurance companies seeking the mergers say deals will actually reduce premiums.  

Aetna and Anthem both said they would save billions of dollars through this deal, which would remove unnecessary administrative costs.

It remains to be seen whether these mergers will receive state regulatory approvals.

The AMA has one of the largest political lobbying budgets of any organization in the United States.