This week, the Subcommittee on Antitrust, Competition Policy and Consumer Rights of the Senate Judiciary Committee held a hearing , “Examining Consolidation in the Health Insurance Industry and its Impact on Consumers,” which sought to investigate the potential effects of the proposed mergers between Aetna and Humana and Anthem and Cigna. Similar to efforts by the House Judiciary Committee, but focusing solely on the proposed mergers themselves, this hearing included testimony from representatives of the companies involved, the hospital industry, academics, and consumer advocates. Senators on the subcommittee expressed concern at the magnitude of the proposed mergers and how that consolidation would affect price and consumer choice in the future.
Witnesses included: Mark T. Bertolini, chairman and CEO, Aetna; Joseph R. Swedish, president and CEO, Anthem; Paul Ginsburg, PhD, University of Southern California; Leemore S. Dafny, PhD, Northwestern University; Richard J. Pollack, president and CEO, American Hospital Association; and George Slover, senior policy counsel, Consumers Union. Dafny, Pollack, and Slover all opposed the mergers and warned they would mean higher premiums and fewer choices for beneficiaries, and lower reimbursements for providers. Slover, of Consumers Union, warned that the power the insurers would yield should the mergers proceed would be so great, providers would have no negotiating options and ultimately be faced with “offer[s] they could not refuse.”
Both subcommittee Chairman Mike Lee (R-UT) and Ranking Member Amy Klobuchar (D-MN) pressed the CEOs of the two insurance companies for the reasons for their mergers, which were both based on administrative efficiencies and acquiring different services and sectors of the market from the other insurers, and wondered if the insurers wanted to expand their businesses and offer new services, why they simply did not do that, rather than acquire another company. Both Bertolini and Swedish stated it would be faster and cheaper to merge with the competition, rather than actually try to compete with them. Slover cautioned, however, that while some economies of scale and administrative gains may be beneficial to the market, they should not be achieved only by excessive leverage over providers and consumers. Finally, Ginsburg, who did not take a position on the mergers, noted that there have not been sufficient studies into the effects of insurance consolidation, other than one performed by Dr. Dafny; however, there was ample study and evidence to suggest hospital mergers do increase prices and have no corresponding increase in quality to infer a similar result should these mergers go through.
An additional hearing regarding the mergers is planned for the House Judiciary committee, but no date has been announced. ASCRS and others in the medical community are working to ensure the physician perspective is considered in the investigation of the proposed mergers. We will keep you updated.