The heads of two of the country’s largest health insurers defended rampant consolidation in the industry Tuesday as they testified before Congress that their companies’ planned transactions would not harm competition.
Speaking to a group of senators, Aetna CEO Mark Bertolini and Anthem CEO Joseph Swedish downplayed concerns that the increase in mergers and acquisitions among leading insurers – including two proposed transactions involving their own companies – will depress competition and raise prices.
“We are not at all concerned about the lack of competition in local markets,” Bertolini said, while Swedish stressed that, “There are many new players that have entered the market and continue to enter the market.”
The comments come as the US Justice Department considers whether to approved Anthem’s prposed $48 billion takeover of Cigna and Anthem’s $35 billion purchase of rival Humana. If both transactions are approved by the government, the five major US health insurers would be shorn down to three.
Bertolini and Swedish told senators that their proposals will save money by cutting overlapping costs, allow them to enter new markets and gain negotiation leverage over healthcare providers. These savings could then be passed on to consumers, the CEOs said.
Many in the government and industry as a whole dispute such claims, however. Connecticut Senator Richard Blumenthal spoke for these critics during the hearing, saying he was “deeply concerned about these mergers.”
“I’m deeply troubled by the evidence that shows that neither [healthcare] providers or consumers benefit from these mergers,” Blumenthal told the CEOs.
He suggested that both transactions raise “serious competitive concerns,” and expressed doubt that any potential savings would indeed be shared with policyholders.
Healthcare bodies such as the American Medical Association and the American Hospital Association have also spoken out against the transactions. Earlier this month, an AMA study concluded that the Anthem and Aetna proposals would result in an insurance market dominated by few players and high consumer premiums.
By the AMA’s estimation, proposed mergers could reduce competition in 23 states and 154 metropolitan areas.
Meanwhile, the American Hospital Association has sent a letter to the Justice Department saying the Aetna-Humana deal “threatens serious and widespread competitive harm” to consumers, particularly Medicare beneficiaries.
According to the AHA, more than 30% of the nation’s 55 million Medicare beneficiaries have enrolled in private Medicare Advantage plans. As the two insurers represent a high proportion of these individuals, a merger would mean less market choice.
Already, enrollment in health plans was concentrated among the three largest insurers in most states. The three largest carriers claimed at least 80% of enrollment in 37 states, and in more than half, a single insurer boasted more than half of the total enrollees.
The Justice Department must pass judgment on the mergers this year.
