The proposed Anthem-Cigna and Aetna-Humana mergers will have a substantial impact on consumers, healthcare providers, and health insurance markets across the country. However their effects will vary in different locations. A new article by Andy Miller of Georgia Health News looks at the proposed mergers and concludes that they will greatly reduce competition in the state’s health insurance markets. He could not be more right.
Choices are crucial to competition and when it comes to choice, Georgia health insurance markets are on life support. They are already highly concentrated even without the proposed mergers, with the top four insurers control over 75% of the market. If the acquisitions proceed, a combined Aetna-Humana company would possess 58% of the individual market share in Georgia, and a combined Anthem-Cigna company would possess 29% of that market share. Together the two companies would control almost 90% of the market, giving them near monopolistic power. Aetna-Humana would also control nearly half of the small group market and 35% of Georgia’s Medicare managed care population. Health insurance premiums are already increasing by as much as 29% in 2016, so fewer choices means higher premiums and inferior service. Period.
Sometimes it is difficult to predict the impact of mergers, but that is not the case with health insurance. Study after study has told a simple truth—when insurance mergers occur consumers pay higher premiums. The proposed deals would likely cause healthcare costs to increase, and consumers would have to pay more.
Since the likely effects of the merger in Georgia are so dramatic, the proposed deals have drawn criticism from healthcare providers and consumer groups. The Medical Association of Georgia issued a statement opposing the mergers and claiming that in the individual insurance market they would establish “a kind of monopoly that undermines our free market system.” The consumer group Georgians for a Healthy Future said they “are very worried that consumers will face higher costs without experiencing better quality if these mergers are approved.” They further expressed concerns that the deals could limit access to care and urged antitrust regulators to “hold the merging companies’ feet to the fire in terms of costs, access, and quality for consumers.” Studies of previous health insurance mergers have cast doubt on the claim that such acquisitions will benefit consumers.
Aetna has nevertheless expressed confidence that its combination would improve the healthcare system, give consumers more choices, and improve access to affordable, higher quality care. Several states have already approved the mergers.
What do businesses, consumers, healthcare providers, and competitors need? Public hearings in which the public can get a complete view of the competitive impact of the mergers. Fortunately, the Georgia Office of Insurance and Safety Fire Commissioner is reviewing the mergers with the help of a hired economist and has pledged to hold hearings on both acquisitions. However they have not yet been scheduled. Given the great impact that the mergers will probably have in Georgia markets, when the hearings do occur, it is all the more important for consumer groups to make their voices heard, to raise their concerns about the combinations, and to urge antitrust regulators to take firm action to protect consumers and maintain competition.