Last week, the Senate Subcommittee on Antitrust, Competition, and Consumer Rights held a hearing on the enforcement of antitrust laws. Assistant Attorney General William Baer of the Antitrust Division and Chairwoman Edith Ramirez of the Federal Trade Commission both gave testimony, and the Senators followed up with questions. The Committee left no doubt that it intends to closely examine monitor oversight efforts, and the Department of Justice offered insight into its review of the proposed Anthem-Cigna and Aetna-Humana health insurance mergers.
Assistant Attorney General Baer and Chairwoman Ramirez began by saying that both DOJ and FTC are dealing with a tsunami of mergers in recent years, and that the mergers are frequently larger than in the past. Consumer advocates, legislators, and healthcare provider groups have criticized the Anthem-Cigna and Aetna-Humana mergers, which are being investigated by state insurance commissioners, state attorneys general, and DOJ.
Baer also clearly stated that DOJ is carefully reviewing how the mergers will affect consumers and employers, and how they will impact local, state and national markets. He described them as “transformational mergers in a number of markets, including Medicare Advantage and commercial insurance, where we would be going from five national providers down to three.” Senator Charles Grassley (R-IO) expressed concern that the mergers could lead to higher health insurance premiums, and Baer assured the Committee that DOJ would look at the acquisitions carefully. He answered Grassley that “if there’s a reduction in quality that results from a merger—even if there’s no price increase—that is a legitimate concern of merger enforcement both at the FTA and the antitrust division.”
Senator Richard Blumenthal (D-CT) made some remarks as well. He bluntly stated that the current merger policy has failed and that DOJ needs to rethink its approach. He also noted that that divestitures intended to remedy the 2012 Humana Arcadian deal largely failed, and that divestiture was futile as a remedy. Baer agreed with those conclusions, and emphasized that he would look at the combined impact of the two health insurance mergers.
It is encouraging that DOJ recognizes that these acquisitions would be transformational and that they are closely examining them. Recently antitrust regulators have shown an increased willingness to challenge mergers that will reduce competition and harm consumers. We hope that this trend will continue, that DOJ will learn from previous experience, and that regulators will evaluate these deals based on whether they benefit consumers.