AHA, AHIP square off over insurer mergers

The American Hospital Association submitted a letter to the Department of Justice last week requesting vigorous review of the proposed Anthem-Cigna and Humana-Aetna deals.

The AHA stated that proposed mergers between four of the five largest U.S. health insurance companies present "fundamentally different" antitrust issues than hospital mergers.

"The size, scope and enduring impact of the announced deals far surpass any hospital merger," Melinda Reid Hatton, senior vice president and general counsel for AHA, wrote to the DOJ's antitrust division. Attached to her letter was an analysis of the proposed merger between Anthem and Cigna. Because "the size and scope of the proposed acquisitions is so enormous," the AHA is addressing each deal separately in letters.

She said mergers and acquisitions in the hospital sector are driven by the need to take on risk, offer integrated care and/or find financial stability. Despite these pressures, growth in hospital spending has reached historic lows, she said.

"[Insurers] will no doubt argue that the transaction would produce offsetting efficiencies, but this is not likely," Ms. Reid Hatton wrote. "And it is even less likely that the combined companies would 'pass through' any cost savings to consumers. As numerous economists have found, demand for health insurance is inelastic, which reduces the incentive for large health insurance companies to pass through cost savings."

America's Health Insurance Plans responded to the AHA on Friday, according to The Hill, arguing that insurers want to maintain affordable coverage by negotiating lower medical bills and shifting to more value-based reimbursement models. The trade group also said hospital consolidation — not insurer consolidation — is undermining progress toward high-value care.

"The drive to deliver better value for patients is being undercut by years of anticompetitive hospital consolidation that [has] forced patients to pay higher healthcare costs, increased premiums and limited their healthcare choices," Beth Leonard, executive vice president of public affairs for AHIP, said in a statement.

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