Beware of hype about how consumers will benefit when health insurers merge

About Joseph Burns

Joseph Burns (@jburns18), a Massachusetts-based independent journalist, is AHCJ’s topic leader on health reform. He welcomes questions and suggestions and tip sheets at



One important question to ask about any health insurance merger is how will the deal will affect the local market.

It’s said that all politics is local and the same is true in health care. That’s why antitrust regulators will look closely at Anthem’s proposed acquisition of Cigna and Aetna’s proposed deal to buy Humana, which we covered earlier this month.

Scott Hensley outlined the issues well in an article for NPR, reporting that mergers among hospitals and other providers force health insurers to get larger as well. Almost 100 hospital mergers and acquisitions per year over the past few years give providers more leverage with health insurers, he wrote. In addition, mergers allow health insurers to grab a bigger piece of the lucrative Medicare Advantage market, he added.

In Forbes on Monday, Robert Laszewski summed up the situation this way, “Now we seem poised to enter a new era of even larger local health care delivery giants facing off against even bigger health plan giants,” wrote Laszewski, a consultant and long-time observer of the health insurance industry.

He cautioned readers not to buy the hype that health insurers merge because they need more data on consumers. Insurers already have plenty, he argued.

In Florida, for example, Humana has 37 percent and Aetna has 6 percent of the Medicare Advantage market, he wrote. Therefore, the combined entity would have 43 percent of that market. “How would the data be any better than what Humana has today?” he asked.

This is a strong angle for journalists because market share clout will be among the most important questions regulators will pursue.

Earlier this month, Thomas Greaney explained the antitrust issues comprehensively in Health Affairs. “Because each market is local, antitrust analysis would also require an assessment of the competitive overlap in each region,” he wrote. Greaney, is the Chester A. Myers Professor of Law and director of the Center for Health Law Studies at Saint Louis University School of Law.

There is no evidence that insurance or provider monopolies are good for consumers, he wrote, citing Boston and Pittsburgh as evidence that big is not necessarily better in health care or health insurance.

For a good review of the regulatory hurdles insurers face, see this thorough analysis in The New York Times by Robert Cyran. Regulators are concerned about how reduced competition may drive up prices, he explained, writing, “Insurance markets are highly concentrated, and big mergers will make them even more so.”


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