By Jill Zorn
“Merger mania” is underway in the health insurance industry.
The Supreme Court decision, King v. Burwell, is a big win for consumers. It upholds the Affordable Care Act (ACA) giving subsidies to people who buy private insurance through the federal marketplace.
But, as Wendell Potter points out in this recent blog post, it is also a big win for insurance companies, whose arguments in an amicus brief appear to have influenced Justice Roberts to write his opinion upholding the law.
News is emerging almost daily about possible mergers. Anthem is seeking to buy CIGNA. Aetna is courting Humana. And UnitedHealth Group may be eying Aetna.
Justice Roberts wrote in the opinion, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” Now, secure in the knowledge that the federal government will continue to provide subsidies for their products, insurers are seeking to grow their customer base and their profits through corporate mergers. In the process, they may end up undermining insurance markets, not improving them, by reducing competition and wielding monopoly pricing power.
It is up to the Federal Trade Commission to protect consumers by making sure that mergers don’t lead to monopoly pricing. The Department of Justice’s Antitrust Division also reviews mergers, and the Wall Street Journal reports that they will scrutinize any proposed health insurer deals closely.
Articles about potential mergers highlight their benefits for shareholders. Even CEOs of the losing companies will win. Their golden parachutes are ready and waiting for them in case they have to jump.
Rank-and-file employees are not likely to fare as well. And consumers and health care providers will be the real losers.
Recently, the American Academy of Family Physicians sent a letter to the Chairwoman of the FTC stating:
Proponents of mergers in the industry will proclaim that consolidation will make the industry more efficient and, therefore, more affordable for individual consumers. However, in our opinion, mergers in the health insurance industry would have an immediate and profound negative impact on the availability and affordability of health insurance for millions of consumers… Bigger insurance companies mean increased leverage and unfair power over negotiating rates with hospitals and physicians. More often than not, consolidation increases costs and reduces options for consumers and we believe this would hold true in the health insurance market.
One commentator writing for Fortune speculated that all of these mergers could bring us one step closer to single payer. But I don’t think that creating greater efficiencies through single payer is what the health insurance companies have in mind right now.
Last week we blogged about how high co-pays and deductibles make it difficult for people to afford using their health insurance. We have also written about the dangers of hospital consolidation leading to higher prices and fewer choices for consumers and we have highlighted how, Senate Bill 811, seeks to provide greater consumer protections and oversight.
Now “merger mania” among health insurers may pose yet another threat to keeping the Affordable Care Act truly affordable.