Hospital association says consolidation could reduce competition in 817 markets

Joseph Burns

About Joseph Burns

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

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One local story to follow when any health insurer considers acquiring another is how the new entity could affect competition. By that standard, there could be 817 local stories to cover simply as a result of Anthem’s plan to acquire Cigna, according to the American Hospital Association (AHA).

In a letter Thursday to the U.S. Department of Justice, Melinda Reid Hatton, AHA’s senior vice president and general counsel, said Anthem’s acquisition of Cigna could reduce competition among health insurers in at least 817 geographic markets and affect 45 million Americans.

Both Anthem-Cigna deal and Aetna’s proposal to merge with Humana warrant close scrutiny from federal and state regulators to determine whether divestitures or other remedies will mitigate the loss of competition, she added. The AHA is working on a separate analysis of how many health insurance markets the pending Aetna-Humana deal could affect.

How federal and state regulators view insurance company mergers will be a story to follow closely because such mergers are likely to affect consumers’ choices and premiums for years to come, as Trudy Lieberman explained in an article for the Columbia Journalism Review.

Lieberman suggested covering this story as Anna Wilde Matthews and Christopher Weaver did in The Wall Street Journal. In their article, “Health Mergers Could Cut Consumer Options,” Matthews and Weaver laid out where some of the big insurers’ markets overlap and limit competition.

Enrollment already is concentrated in most states among the three largest insurers, according to a report published last year by the U.S. Government Accountability Office. The report examined the individual, small group, and large group health insurance markets in 2013. Looking at these markets before the key provisions of the ACA went into effect in 2014, the GAO showed that in 37 states the three largest insurers had at least 80 percent of the total enrollment in each market segment.

One way to evaluate how consolidation could affect competition is to ask health insurance brokers, as Reed Abelson of The New York Times did in a recent article. Brokers are excellent sources because they know their local, regional and state markets so well.

“In Kansas, for example, Aetna and Humana have 90 percent of the market for Medicare Advantage plans, according to data from the Kaiser Family Foundation,” Abelson wrote.

Chad Terhune of the Los Angeles Times reported that the biggest concentration of market power for Anthem and Cigna is with employers. The two companies would have more than 50 percent of the commercial insurance market in some areas, and Anthem already dominates in 10 of the 14 states where it operates, he wrote.

The American Medical Association made a similar point in a press statement last month, saying that its analysis of insurers’ market share shows that the proposed Anthem-Cigna merger could be considered anticompetitive in nine of Anthem’s 14 states. Journalists can request a copy of the 2014 edition of the AMA report, “Competition in Health Insurance: A Comprehensive Study of U.S. Markets,” which the association describes as the most complete picture of competition in health insurance markets for 388 metropolitan areas, as well as all 50 states and the District of Columbia. To request a media copy, email AMA Media & Editorial. (Note that the AMA requires journalists to be listed in the Cision media database.)

Other resources to consider are from the Kaiser Family Foundation, including its interactive State Health Facts report, Individual Insurance Market Competition, and Data Note: Medicare Advantage Enrollment, by Firm, 2015, which was published in July.

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