(Bloomberg) — U.S. hospitals are stepping up their bid to stop Anthem Inc.’s takeover of rival health insurer Cigna Corp., saying the deal will increase the dominance of Blue Cross Blue Shield plans and potentially raise premiums for consumers.
The enhanced bargaining power of the Blue Cross plans will undermine competition and should compel the Justice Department to stop the deal, the American Hospital Association (AHA) wrote in a letter to the department’s antitrust chief Bill Baer.
Blue Cross Blue Shield is an association of independent insurers operating across the country. Anthem (NYSE:ANTM) operates health insurance plans under the brand in 14 states.
“The acquisition threatens to both reinforce existing barriers to entry and raise new ones, further entrench dominant Blue plans, and exacerbate conditions conducive to abuse of market or monopoly power,” according to the letter, which was dated Monday.
The hospital group’s missive adds a new set of criticisms to prospective mergers that have the potential to remake the U.S. health care industry. Anthem’s $48 billion deal for Cigna (NYSE:CI), together with the planned Aetna Inc. (NYSE:AET) takeover of Humana Inc. (NYSE:HUM), would consolidate the country’s five biggest health insurers into three.
By bulking up, insurers would gain more power to negotiate prices with hospitals and doctors, which has fueled warnings from the hospital association and the American Medical Association (AMA) that the deals could lead to less choice and higher costs for consumers.
Baer, whose antitrust division of the Justice Department is investigating both mergers, has cautioned that consumer choice is a bigger priority than health companies’ desire to add market share and gain leverage over providers like hospitals.
Matthew Asensio, a Cigna spokesman, referred comments to Anthem.
Anthem is working with the Justice Department and is confident that the United States will review the proposed merger based on fact, Anthem said in a statement provided to Bloomberg News.
“Together, Anthem and Cigna, which have limited overlap in a highly competitive industry, will be in a better position to improve consumer choice and quality,” Anthem said in the statement. “Additionally, we will deliver for consumers by operating more efficiently to reduce our own costs, while enhancing our ability to manage the cost drivers that negatively impact affordability for consumers.”
America’s Health Insurance Plans (AHIP), which represents the health-insurance industry, said the hospital association’s letter fails to reflect the level of competition in the market.