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Analyst: Dull health deal hearing equals good news for deals

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The lack of drama at today’s Senate hearing on health insurance company consolidation could be exciting news for investors and others who want the big deals already announced to close.

Brian Wright, a securities analyst at Sterne Agee CRT who attended the hearing, gave that assessment in a comment on the proceedings. Wright told his firm’s clients that he was impressed by the “balanced nature of the discourse and questions.”

“There were no heated exchanges or real sparks,” Wright said.

The Senate Judiciary antitrust subcommittee held the hearing to look at efforts by Aetna Inc. (NYSE:AET) to acquire Humana Inc. (NYSE:HUM), and by Anthem Inc. (NYSE:ANTM) to acquire Cigna Corp. (NYSE:CI).

Mark Bertolini, chief executive of Aetna, appeared to defend the Humana deal, and Joseph Swedish, president of Anthem, came out to defend the Cigna deal.

Dafny Leemore, an antitrust researcher, said academic research shows that health insurer deals appear to drive up the cost of health coverage and cut payments to health care personnel.

One study showed that a big health insurance company deal increased large-group premiums by about 7 percent, another study showed a deal in Nevada increased small-group premiums there about 14 percent, and new entrants are unlikely to appear to challenge the dominant player, Dafny said.

See also: Witness: New insurers shun U.S. commercial health market

But the consensus among health policy specialists in the audience was that the Justice Department will end up letting Anthem and Aetna complete their deals, Wright said.


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