Seven U.S. Senators Announce Opposition to Health Insurance Mergers, Call on DOJ to Block Them

June 23, 2016

 

Yesterday, seven U.S. senators released a letter to the Department of Justice announcing their opposition to the Anthem-Cigna and Aetna-Humana mergers on the grounds that they would hurt consumers by increasing premium prices and overall costs, diminishing competition and choice, and reducing access to quality care. They also called on DOJ to challenge the mergers, and stated that neither merger could be fixed by divestitures.

 

The Senators opposing the mergers are Senators Richard Blumenthal (D-CT), Al Franken (D-MN), Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Edward Markey (D-MA), Dianne Feinstein (D-CA), and Mazie Hirono (D-HI). In the letter, they laid out a compelling case for why the mergers would leave consumers, unions, and employer groups worse off. 

 

We have previously written that vigorous competition in markets matters and greatly benefits consumers by resulting in increased choice, lower prices, and better quality. The Senators agreed in their letter, and observed that “the mergers would occur against a landscape of a health insurance industry that is already highly consolidated…This trend toward consolidation in the health insurance market has resulted in these few, large insurers having significant leverage—and with it, the potential for market abuse.” As we have also noted, the merging companies have committed numerous consumer protection violations, and shown little sign of improvement. 

 

The letter focused on the mergers at the national and local level. If these two deals procced, only three insurers would control 91% of the national private insurance market. Competition would be reduced in 126 metropolitan statistical areas, and the merging companies would have little incentive to expand into new markets. Not just existing competition but potential competition would be eliminated. They also rejected Aetna’s claim that its acquisition of Humana was not that large a concern, and pointedly observed that Medicare Advantage markets were highly concentrated, Aetna and Humana held significant shares of the MA market, and MA is a different market from traditional Medicare. As for the Anthem-Cigna merger, it would greatly decrease competition in markets with the two companies compete and in any market where Cigna competes, due to Blue Cross Blue Shield’s two-thirds rule.

 

The Senators concluded with a strong statement about how the mergers would affect ordinary citizens. They noted that “history shows that mergers can frequently cause job losses…Economists are also increasingly warning that excess monopoly power concentrates profits and power in fewer hands at the expense of wage and job growth. Families facing higher premiums may similarly be harder pressed to spend household income in their local economies. For all of the above reasons, we urge to challenge the proposed mergers of Aetna-Humana and Anthem-Cigna.”

 

This letter shows that the consumer’s voice is louder than money. Even a $400 million army of lobbyists and attorneys could not convince these Senators, in the face of all evidence to the contrary, that these mergers would benefit consumers. The Department of Justice should heed these seven voices and block these deals, no matter how much money has been spent.

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