Recent merger frenzy talks involving five of the nation's largest health insurers have become a cause of concern for many in the healthcare industry.
In the past month, there has been an endless stream of takeover talks in the health insurance sector: Aetna and Cigna have both shown interest in taking over Humana; Anthem has made two takeover bids for Cigna, and Cigna rejected both of them; and UnitedHealth Group approached Aetna about a takeover deal.
Proponents of these deals say the transactions could lead to savings for policyholders, as a bigger health insurer would be able to negotiate lower prices with hospitals, physician groups and drug makers and then pass along those savings to its members.
However, the prospect of the nation's largest health insurers joining forces is not setting well with many, including physicians, insurance regulators, and health system executives. Here is what they're saying about the possible deals.
1. Dave Jones, California's elected insurance commissioner, said the mega-mergers among the major health insurers could harm consumers, employers and medical providers. "It means the potential for future price increases as a result of less competition," Mr. Jones told the LA Times.
2. San Francisco-based Pacific Business Group on Health, which represents large employers such as Boeing and Walt Disney, voiced similar concerns as Mr. Jones. "As these mergers happen, what guarantees will the parties make to providing sufficient transparency into how services are priced, what quality is being achieved and where to go to get the best care at the best price?" David Lansky, CEO of Pacific Business Group on Health, told the LA Times.
3. Physicians are concerned about the potential mergers as well. The American Academy of Family Physicians sent a letter to the Federal Trade Commission this month outlining the negative consequences of the deals and urging the FTC to carefully review any proposed transactions between the major insurers. Those mergers "would have an immediate and profound negative impact on the availability and affordability of health insurance for millions of consumers. Recent actions by the insurance industry, with respect to the narrowing of physician and hospital networks, would only be exacerbated if a single insurer held greater influence over any potential market, state or region," the letter read, according to a Pittsburgh Post-Gazette report.
4. Hospital executives are also showing opposition to the health insurance mega-mergers. Kenneth Davis, MD, president and CEO of Mount Sinai Health System in New York City, told CNBC that consolidation in the health insurance industry is "potentially dangerous."
"We'll have fewer people to negotiate with. They'll be able to run our rates down even lower than they are now," said Dr. Davis.
5. John Krah, executive director of Allegheny County Medical Society, also has concerns about the effects of the potential mergers, such as the limitations the deals could put on customers' choices. However, he did find one positive aspect to the transactions. "There undoubtedly would be some administrative benefits if there were fewer insurers to deal with," he told the Pittsburgh Post-Gazette.
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