The pending mergers of Aetna-Humana and Anthem-Cigna will leave the US with only three large health insurers. The American Medical Association identifies 17 states where those acquisitions raise anti-trust questions.
The prospect of the US having only three big health insurers is not sitting well with the American Medical Association (AMA).
When Aetna completes its $37 billion purchase of Humana and Anthem finishes its $54 billion buyout of Cigna, those two new merged entities and United Health Care will be the new big three insurers.
That will result in antitrust concerns in 97 metropolitan markets in 17 states, according to a new AMA analysis.
The Aetna and Humana merger was announced in July, and stock prices rose as investors anticipated marketing opportunities, savings and efficiencies for those companies.
Don’t expect that to have benefits for patients and doctors, the AMA said.
“A lack of competition in health insurer markets is not in the best interests of patients or physicians,” said AMA President Steven Stack, MD. Instead, the future is likely to hold higher premiums for employers and policy-holders and lower payments for physicians, he said.
The Aetna-Humana company will have more than 33 million members, and bring in estimated revenue of about $115 billion per year, with 56% coming from government-sponsored programs such as Medicare.
The $54 billion merger to be formed by Anthem’s purchase of Cigna, also announced in July, will enhance those companies’ market share in 85 metropolitan areas within 13 states, including California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio and Virginia. The merger would also raise significant competitive concerns in additional markets. All told, the Anthem-Cigna merger would diminish competition in up to 111 metropolitan areas within all 14 states that Anthem currently operates: California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia and Wisconsin.
As for the proposed union of Aetna and Humana, the merger could give the combined companies more control of the market in 15 metropolitan areas within seven states: Florida, Georgia, Illinois, Kentucky, Ohio, Texas and Utah. The merger would also raise “significant competitive concerns and diminish competition in up to 58 metropolitan areas within 14 states: Arizona, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, Ohio, Tennessee, Texas, Utah, Wisconsin and West Virginia.
The AMA is alarmed that competition among insurers is dropping. Using a standard known as Herfindahl—Hirschman Index, a commonly accepted measure of market concentration, the AMA’s analysts found that the majority of US commercial health insurance markets are already highly concentrated. (The HHI is calculated by squaring the market share of each firm competing in the market and then summing the resulting numbers).“Our findings should prompt federal and state antitrust authorities to vigorously examine the competitive effects of proposed mergers between health insurers in the future,” the AMA concluded.
The report Competition in Health Insurance: A Comprehensive Study of U.S. Markets is free to AMA members. The study is also available for purchase at AMA Store, or by calling (800) 621-8335. The item number is OP427115.