Post Confirms HIAA/AAHP Merger Failure
The Washington Post on Dec. 14 confirms that the Health Insurance Association of America has pulled out of merger discussions with the American Association of Health Plans, a deal that would have united "two of the most powerful lobbies" in the health care industry. HIAA Chair John Sturgeon and HIAA Chair-elect William McCallum told members in a letter, "Although we had hoped to be able to report positively on the extensive negotiations with the AAHP over the past several months, ... regrettably, we could not find sufficient common ground to justify moving forward." According to industry sources, Cigna Corp. and WellPoint Health Networks Inc. "pushed" the merger, but smaller insurance companies without managed care interests feared "losing their voice" in a larger organization (Sarasohn, Washington Post, 12/14). "They were worried they'd get swallowed up by the big guys. They were afraid they would lose their voice," one source said. Another source said that the discussions "collapsed" in part because the groups have "very different corporate cultures," noting, "The two organizations, while they sound a lot alike and take similar positions on things, if you look deeper, there's a lot of differences there." AAHP officials declined to comment but will likely release a statement on Dec. 14, a spokesperson for the group said (Rovner, CongressDaily, 12/13). However, one unnamed AAHP official called the failed merger a "missed opportunity" to build an "even stronger organization" that could address Congress "with clarity of voice" (Washington Post, 12/14). Just last week, industry sources reported that HIAA and AAHP had "agreed in principle" to the merger, with both HIAA's and AAHP's boards signing a "memorandum of intent to merge." Under the terms of the merger, AAHP President Karen Ignagni would have headed the new organization (Kaiser Daily Health Policy Report, 12/13). Industry sources said that HIAA President Chip Kahn would have received a "generous settlement" and likely assumed a post in President-elect George W. Bush's administration (CongressDaily, 12/13).This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.