California

April 27, 2016

On April 27th, 2016, antitrust lawyer David Balto submitted testimony on behalf of the Coalition to Protect Patient Choice before the California Department of Insurance Commissioner Dave Jones regarding the proposed merger of Aetna-Humana. The purpose of this testimony was to raise concerns about the merger and its impact on healthcare in California and to urge the Department to carefully analyze its potential adverse competitive effects and block the merger. Here are a number of specific points raised:

 

 

  • The combination of Aetna and Humana will reduce competition for Medicare Advantage in eight separate counties—Fresno, Kern, Los Angeles, Orange, Riverside, San Bernardino, San Diego, and Ventura.

 

  • This proposed merger is taking place during a period of concentration in the California health insurance market. California has just approved the merger of Centene-Health Net and is also considering the proposed merger of Anthem-Cigna. Meanwhile the growth in workers’ contributions to premiums has greatly outpaced wage growth since 2000.

 

  • Practically all credible studies and retrospective analysis has concluded that increased concentration leads to higher premiums, decreased quality of care, and less innovation. Current market regulations will not fix the problems with this merger.

 

  • The DOJ has relied on the structural remedy of divestiture in nearly every health insurance merger enforcement action over the past two decades, and most of those remedies have failed.

 

  • In considering its recommendations for the merger, the California Department of Insurance should ask the following questions: 1) Will this proposed merger harm Californians? 2) Can this harm be remedied through conditions?

 

 

 

To see the written testimony submitted to Commissioner Jones please click here.

 

To see the letter the California Medical Association submitted to Commissioner Jones, click here

 

To see the comments Consumers Union submitted to Commissioner Jones, click here

On June 23rd, 2016, California Insurance Commissioner Dave Jones released a letter opposing the Aetna-Humana merger on the grounds that it was anticompetitive and would harm consumers. He also called on the Department of Justice to block the merger. To read his letter, please click here

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