Hospitals say the only practical way to keep big health insurer deals from hurting the U.S. health care system is to block the deals.
Health insurers say they’re making the deals to cope with the effects of the hospital companies’ huge wave of deals.
See also: Insurers take on the hospitals
The American Hospital Association (AHA) is presenting the hospitals’ case in a letter sent to William Baer, the assistant attorney general in charge of the U.S. Justice Department antitrust division.
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Melinda Reid Hatton, a senior vice president at the AHA, writes in the letter that the proposed acquisition of Cigna Corp. (NYSE:CI) by Anthem Inc. (NYSE:ANTM) and the acquisition of Humana Inc. (NYSE:HUM) by Aetna Inc. (NYSE:AET) are fundamentally different from the hospital deals made in the past.
“These transactions will combine four of the five national health insurance companies, with effectively no possibility that existing firms could replicate their size and scope,” Hatton says.
In the letter, Hatton talks about both the Anthem-Cigna deal and the Aetna-Humana deal, but she says the current letter and accompanying AHA analysis, focus mainly on the Anthem-Cigna deal. A separate Aetna-Humana letter will come later, she says.
For more about why the AHA says the Anthem-Cigna deal would be so harmful, and what America’s Health Insurance Plans (AHIP) says about hospital and health insurer consolidation, read on.
1. The AHA says branding is one huge obstacle to entering a health insurance market.
In an analysis accompanying Hatton’s letter to the Justice Department, the AHA contends that employers and individuals that switch health plans often face substantial transition costs.
Because of those costs, “employers and individuals are often very reluctant to switch to a company that lacks an established brand in the relevant geographic market,” the AHA says. “Even companies with strong positions in other regions can flounder in markets in which they lack a strong track record of providing high-quality services.”