- Imagine the messy difficulties that ensue from attempting to unscramble an egg. This visual is one the American Medical Association (AMA) likens the future of competition and consolidation connected to proposed mergers to: a potential hot mess of dangerously entangled events and actions that are seemingly impossible to reverse.
As RevCycleIntelligence.com reported, Aetna agreed to acquire Humana for a financially staggering $37 billion in cash and stock last July. One month prior, Cigna rejected Anthem’s “woefully skewed” nearly $54 billion proposal to acquire Cigna for over $180 per share. Insurance mergers may be hurting the healthcare industry, as they allegedly drive up health insurance premiums by diminishing competition and decreasing choice levels for beneficiaries, as RevCycleIntelligence.com reported.
In light of such news, the AMA is actively warning congressional leaders about the extended detrimental impact of proposed multi-billion dollar mega-mergers with Anthem/Cigna and Aetna/Humana.
During last week’s hearing with the House Judiciary Committee, Andrew W. Gurman, MD, AMA President-elect, cautioned that the aftermath of proposed Anthem/Cigna and Aetna/Humana mergers upon “an already heavy consolidate commercial health insurance market” is inherently consequential.
“You can’t unscramble an egg,” Gurman states within written testimony to the House Judiciary Committee. “Thus, we believe that the time for heightened scrutiny and careful consideration is now, before proposed mergers take effect and patients are irreparably harmed. The solution lies in more, not less, competition," he adds.
It is competition, as opposed to consolidation, that is truly best for health insurance markets, he said. "Competition can lower premiums and incentivize insurers to enhance customer service, pay bills accurately and on time, and develop and implement innovative ways to improve quality while lowering costs,” stated Gurman.
“Competition also allows physicians to bargain for contract terms that touch all aspects of patient care. This is critical because practicing physicians’ overarching aim to provide the best care for their patients can be frustrated when insurers exert clinical pressures and compromise the health care decision-making that lies at the heart of the doctor-patient relationship,” he added.
Competition is generally maximized when there is a high volume of sellers, none of which have sizable market share, claims Gurman, additionally confirming competition also proves especially advantageous for patients. “Unfortunately health insurance markets are already mostly highly concentrated, meaning that typically there are few sellers and they possess significant market shares. Thus, most health insurance markets are no longer competitive, while the national market in which large employers purchase coverage is also shrinking,” he says.
Indeed, a scrambled egg cannot be reverted back into its original form, short of newfangled scientific miracles not yet considered. Similarly, the healthcare industry is now at a delicately crucial moment when it comes to making imperative decisions and choices about health insurance mergers, he says. “The current proposals to reduce the five national health insurers to just three should be viewed in light of current conditions, as they threaten to exacerbate the near total collapse of competition among health insurers in most markets,” says Gurman. Once consummated, turning back is not an option, he adds.
The AMA confirmed within a September press release that “the combined impact of proposed mergers would exceed federal antitrust guidelines designed to preserve competition in as many as 97 metropolitan areas within 17 states,” with almost half of all states experiencing decreased competition in local health insurance markets.
"A lack of competition in health insurer markets is not in the best interests of patients or physicians," stated AMA President, Steven J. Stack, MD, within the release. "If a health insurer merger is likely to erode competition, employers and patients may be charged higher than competitive premiums, and physicians may be pressured to accept unfair terms that undermine their role as patient advocates and their ability to provide high-quality care. Given these factors, AMA is urging federal and state regulators to carefully review the proposed mergers and use enforcement tools to preserve competition," he explained.
In light of AMA's recommendations, perhaps it is indeed a miraculous task to effectively unscramble an egg afterall.