The CEOs of Aetna and Anthem, the two big insurers that have offered to pay more than $90 billion to buy two competitors, Humana and Cigna, will testify before a Senate panel Tuesday, in an effort to persuade lawmakers that the deals will be good for consumers. Physician and hospital trade groups and health care advocates are among those that disagree,
Appearing before a Senate Judiciary committee that oversees antitrust issues will be Aetna CEO Mark Bertolini and Anthem CEO Joseph Swedish. The two men undoubtedly will try to make the case that, even though Aetna and Anthem would increase their presence in many markets across the country if regulators approve the acquisitions, there will be little need to sell any of their health plans to pass regulatory muster.
During a House Judiciary subcommittee hearing earlier this month, the American Medical Association said the two mergers would exceed antitrust guidelines in 97 metropolitan areas in 17 states and create a much less competitive marketplace in lots of other markets.
Executives of the firms involved in the proposed deals have insisted that consumers will benefit in the form of lower premiums, despite historical evidence that insurance industry mergers have actually resulted in just the opposite: higher premiums. While it’s true the companies that emerged from previous acquisitions were able to force doctors and hospitals to accept lower reimbursement, the insurers pocketed the savings instead of passing them along to their customers.
The AMA’s concern, of course, is that the same thing will happen if the Justice Department approves the Aetna-Humana and Anthem-Cigna deals and the health insurance marketplace becomes even more dominated by big for-profit insurers.
At the Sept. 10 House hearing, the AMA reminded lawmakers of a Justice Department guideline that a merger enhances corporate leverage “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.”