Health CareNews

Physicians Fear Health Insurance Industry Consolidation

By June 10, 2016 No Comments

With mergers of the country’s largest health insurers on the horizon, healthcare providers worry that increased consolidation will give health plans even greater control of payments, provider networks, and contracts. Physicians and hospitals alike fear that any further consolidation of large health insurance companies will lead to anticompetitive behavior.

In the past month, there have been reports that Aetna may buy Cigna or Humana; UnitedHealth Group may purchase Aetna; and Anthem may acquire Cigna.

“Generally speaking, further consolidation in the health insurance industry is not a good thing for consumers, employers, or medical providers,” stated Dave Jones, California’s insurance commissioner. “It means the potential for future price increases as a result of less competition.” Additionally, large, powerful healthcare organizations are less likely to offer transparent pricing and quality data.

“There is a history of large organizations becoming less willing to disclose data on their prices, utilization, or outcomes, and using their market power to command higher prices,” said David Lansky, chief executive of San Francisco-based Pacific Business Group on Health.

Provider groups are anxious and have urged regulators to scrutinize any proposed consolidation.

“We expect the Department of Justice’s antitrust division to scrutinize every deal,” Melinda Hatton, general counsel and senior vice president of the American Hospital Association stated. “We believe that consolidation of large commercial insurers is the root of higher prices for consumers. We would expect the antitrust division to ensure that none of these new consolidations would add to that problem.”

The American Medical Association reported last year that a single health insurer already has at least 50 percent share of the commercial health insurance market in two out of every five metropolitan areas in the United States.

“Competition in the health insurance industry has been consistently eroding with more markets across the country dominated by one or two insurers,” AMA president Dr. Steven Stack said. “Seventeen states have a single health insurer with a commercial market share of 50 percent or more. The dominant market power of big health insurers increases the risk of anti-competitive behavior that harms patients as health insurers substitute corporate policy over good clinical decisions.”

Some experts state that consolidation means passing on savings to the insured because a bigger health insurer could win lower prices from hospitals, physician groups, and drugmakers due to its massive membership.

“There is no requirement the insurers pass on the savings, and historically I don’t think it has worked out that way,” stated Jones.