AMA: Insurance Mergers Will Reduce Competition and Choice

Steven J. Stack, M.D., president of the American Medical Association, sounded the alarm recently on proposed mergers within the health insurance sector.

“The American Medical Association believes patients are better served in a health care system that promotes competition and choice,” he said. “We have long cautioned about the negative consequences of large health insurers pursuing merger strategies to assume dominant positions in local markets. Recently proposed mergers threaten to increase health-insurer concentration, reduce competition and decrease choice. “The AMA’s own study shows that there has been a serious decline in competition among health insurers with nearly three out of four metropolitan areas rated as ‘highly concentrated’ according to federal guidelines used to assess market competition,” he said. “In fact, 41{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} of metropolitan areas had a single health insurer with a commercial market share of 50 percent or more.
Further AMA analysis shows that based on federal guidelines, the proposed Anthem-Cigna merger would be presumed to be anticompetitive in the commercial, combined (HMO+PPO+POS) markets in nine of the 14 states (NH, ME, IN, CT, VA, CO, GA, NV, KY) in which Anthem is licensed to provide coverage.”

Stack continued, “the lack of a competitive health insurance market allows the few remaining companies to exploit their market power, dictate premium increases and pursue corporate policies that are contrary to patient interests. Health insurers have been unable to demonstrate that mergers create efficiency and lower health insurance premiums. An AMA study of the 2008 merger involving UnitedHealth Group and Sierra Health Services found that premiums increased after the merger by almost 14{06cf2b9696b159f874511d23dbc893eb1ac83014175ed30550cfff22781411e5} relative to a control group.
To give commercial health insurers virtually unlimited power to exert control over an issue as significant and sensitive as patient health care is bad for patients and not good for the nation’s health care system.

“The U.S. Department of Justice has recognized that patient interests can be harmed when a big insurer has a stranglehold on a local market,” he said in conclusion. “Given the troubling trends in the health insurance market, the AMA believes federal and state regulators must take a hard look at proposed health insurer mergers. Antitrust laws that prohibit harmful mergers must be enforced and anticompetitive conduct by insurers must be stopped.”