The American Medical Association has officially asked the Department of Justice to block Aetna’s proposed acquisition of Humana and Anthem’s proposed acquisition of Cigna. Chief among its concerns is the competitive effects of the mergers.
The letter, submitted by James L. Madara, executive vice president and CEO of the AMA, claims the proposed mergers are occurring in markets where there has already been a near total collapse of competition. “Because of persisting high barriers to entry in health insurance markets, the lost competition through these proposed mergers would likely be permanent and the acquired health insurer market power would be durable,” Madara said in his 17-page letter.
He also said, “A growing body of peer-reviewed literature suggests that greater health insurer consolidation leads to price increases, as opposed to greater efficiency or lower healthcare costs. The proposed mergers can be expected to lead to a reduction in health plan quality.”
The AMA said its request is based on an analysis of the likely competitive effects of these mergers, data compiled by the AMA on competition in health insurance industry, recent studies on the effects of health insurer mergers, the testimony of experts called by House and Senate committees, and the written submissions and testimony of the merging parties.
The letter notes that “any remedy short of blocking the mergers would not adequately protect consumers” since a potential divestiture remedy would not be a viable option to protect against the loss of potential competition.
