Health insurance companies today are engaged in a frenzied effort to hook up with each other, but patients could be the ones to suffer with the post-merger blues if the unions go through.
Several months ago, Anthem (a plan affiliated with Blue Cross Blue Shield) announced a $54 billion deal to acquire Cigna, which if approved by federal and state regulators would result in a merged insurer with 53 million covered lives. Just weeks earlier, Aetna reached an agreement to acquire Humana, creating a company with 33 million covered lives, which followed United Health's acquisition of Catamaran, a pharmacy benefit and prescription drug provider. The Anthem-Cigna merger “would leave only 3 major players in the insurance industry,” according to CNN reporter Aaron Smith.
Even so, the insurers claim that patients and doctors will benefit from the mergers. “This will actually improve efficiencies and reduce costs for consumers down the line,” Cigna spokesman Matt Asensio told Mr. Smith. Cigna, in a Dec. 3, 2015, statement announcing approval of the merger by its stakeholders, explained that “The combination of Anthem and Cigna will continue this long history of leadership and will deliver near- and long-term value by accelerating innovation, enhancing our collaborative efforts with providers and, most importantly, increasing consumer access to high quality, affordable health care.”
Enhancing collaborative efforts with providers. Increasing consumer access to high-quality, affordable care. Why would anyone object?
Well, it turns out many people have very good reasons to believe that mergers will result in the opposite of what is being promised: more antagonism and less collaboration between insurers and “providers” and reduced patient access to high-quality, affordable care.
The American College of Physicians is among the biggest and most influential objectors, along with the American Medical Association, American Academy of Family Physicians, and several state medical societies. In a Dec. 3, 2015, letter to Assistant U.S. Attorney General William J. Bauer, ACP President Wayne J. Riley, MD, MPH, MBA, MACP, conveyed the College's “significant concerns about the pending mergers between Aetna/Humana and Anthem/Cigna and the potential negative effects they could have on competition in the health insurance market. ACP is specifically concerned that the consolidation between these companies could lead to significant increases in insurer concentration, decreased choice and increased costs for patients and employers, and a reduction in physician ability to negotiate with insurance companies over provision of services.”
The Department of Justice subsequently asked ACP to meet by phone with the department's antitrust lawyers assigned to the Aetna/Humana and Anthem/Cigna merger and with state attorneys general in the markets most affected. In preparation for the discussion, the College asked several of its members what their experience has been in dealing with insurers and what they expected would be the consequences of the mergers going forward. Here are some of the points that they, and we, shared with the federal and state antitrust regulators:
- When it comes to “negotiating” contractual arrangements with insurers, physicians generally are given a “take it or leave it” option and have no real say in negotiating contract terms.
- Primary care physicians, in particular, reported that they have very limited, if any, ability to negotiate with payers that have a dominant share of the market. By comparison, physicians in highly specialized fields may have more leverage to negotiate favorable terms. The result of further insurer consolidation will be the continued undervaluation of primary care. Primary care physicians already have some of the lowest reimbursement rates, leading to primary care being undervalued relative to other specialties and a growing primary care shortage. One ACP member reported that the dominant payer in his community has not increased payments for primary care office visits in 7 years.
- Many primary care physicians are responding to their lack of negotiating leverage by selling their practices to larger hospital-owned systems or joining larger groups, leading to more consolidation and potentially higher prices. The Los Angeles Times reported on a recent study finding that medical costs are up to 20% higher in hospital-owned physician groups.
- Insurer consolidation and control have led more primary care physicians to considering moving into practice models that do not accept insurance, charge a monthly retainer fee, and see fewer patients (downsizing of patient panels). Such practices, sometimes called concierge practices, can improve access to care for some patients and reduce the administrative burdens associated with insurer transactions; they also have the potential of putting more demands on other established primary care physicians in nonconcierge practices and excluding poorer patients.
For these and other reasons, ACP will continue to press federal and state regulators to block the insurance mergers. As Dr. Riley concluded in his Dec. 3 letter to the Department of Justice, “Consolidating 4 of the largest health insurance companies into 2 entities seriously threatens to undermine the spirit of competition in the health insurance market and could likely have adverse effects on physicians and patients. It is imperative that the Department of Justice Antitrust Division consider both the local and collective impact these mergers could have, and block any deal that significantly increases health insurer concentration resulting in decreased choice and increased cost for patients and employers, reduces access due to changing and narrowing networks of physicians and hospitals, or prevents physicians from negotiation over provision of health services with those insurers.”
Allowing the insurance industry to merge into just 2 or 3 dominant and anticompetitive payers is an offer that the regulators simply must refuse.