Care Providers Concerned About Effect of Potential Health Insurer Mergers on Cost
Some doctors and hospitals are expressing concern about the effect of potential mergers in the health insurance industry on payment rates, the Chicago Tribune reports. According to the Tribune, "Speculation has run rampant that some of the nation's biggest health plans may be looking to consolidate," including the possible acquisitions of Humana by Aetna and Coventry Health Care by UnitedHealth Group. Humana, Aetna and UnitedHealth would not confirm that discussions of a merger have taken place, and Coventry could not be reached for comment, according to the Tribune. One in six U.S. metropolitan areas has one health insurer that controls at least 70% of enrollees in HMOs or PPOs, according to a 2008 American Medical Association study of 300 U.S. markets.
According to the Tribune, the economic recession, which has caused many health insurers to lose business as more employers and consumers drop coverage, is providing the companies with a reason to merge. Historically, insurers have said that consolidating helps them become more efficient. With larger patient pools, insurers say they can negotiate lower payments with medical providers, which could result in lower premiums for consumers, the Tribune reports. Todd Swim, a partner with Mercer, said, "Another issue that is plaguing the market now is the potential Obama health reform plan and ramifications on those companies in the Medicare business."
James Rohack, president-elect of AMA, said, "The promise of saying we are going to come together and have administrative efficiencies and these other projected savings never materialize," adding, "Most of these (health plans) have different IT platforms and software, so it is a false promise of being more efficient compared to what their track records are." Providers also are concerned that mergers will result in lower payments from insurers at a time when they already are worried about "deteriorating reimbursement" from public health insurance programs.
American Hospital Association General Counsel Melinda Hatton said, "In general, hospitals do worry if the super-insurers get bigger," adding that having more insurers competing for business would put "pressure on the insurers to keep their offerings competitive and their prices competitive."
The Obama administration's proposal to encourage increased competition among health plans has led some to believe that the Department of Justice's Antitrust Division will closely scrutinize any proposed insurance firm merger, the Tribune reports (Japsen, Chicago Tribune, 4/8).