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Consumer advocates enlist state regulators to scrutinize insurer mega-mergers

Consumer advocates and antitrust experts have joined forces in their pursuit to ensure state regulators closely scrutinize the proposed mergers of major health insurance companies, according to The New York Times.

David A. Balto, an antitrust lawyer and former federal regulator, on Friday asked the National Association of Insurance Commissioners, comprised of state officials, to create a working group to assist regulators as they conduct their reviews of the proposed mergers of Anthem with Cigna and Aetna with Humana. If these deals are approved, these companies, along with behemoth UnitedHealth Group, would control nearly half of the U.S. commercial health insurance market, according to the report.

Although the National Association of Insurance Commissioners does not have the authority to block a merger, a working group could advise commissioners. State regulators can also seek much broader remedies than federal regulators. For example, they can seek limits on rate increases, investments in rural healthcare improvements or funding for people who cannot afford healthcare, according to the report.  

Mr. Balto believes a vigorous state review could lead the DOJ to hesitate on approving the mergers. Many states will hold public hearings on the matter, which "will be a venue for everybody to raise concerns," he said. 

State officials have been under increasing pressure since the recent failures of many of the insurance co-ops created under the Affordable Care Act, whose main objective was to foster competition and ensure there is enough choice available to consumers. The news that UnitedHealth might pull out of the state exchanges in 2017 also raises the stakes, according to the report.

The DOJ is expected to come up with a verdict on the proposed mergers next year, while state regulators conduct an independent analysis. "If the Justice Department approves it, it in no way obligates a state to approve it," said John Oxendine, a former insurance commissioner in Georgia, according to the report. "If I were a sitting insurance commissioner, it would be a very uphill battle to convince me. It's fewer choices for the consumer, fewer people fighting over the price."

Consumer advocates said they plan to work diligently on the reviews with state regulators. Anthony Wright, the executive director of Health Access California, said state regulators could impose a number of conditions that a merged entity must meet. "We firmly believe if insurers want to get bigger, especially given their track record," he told NYT, "they must commit to getting better."

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