Top U.S. health official highlights need for insurer competition

(Bloomberg) — The Obama administration’s top health official highlighted the importance of competition to insurance markets, as the Justice Department is poised to decide on two massive deals among four of the health-plan industry’s biggest players.

Health and Human Services Secretary Sylvia Mathews Burwell said competition among insurers can reduce costs that consumers face and improve the quality of their health coverage. She declined to comment on her department’s view of Hartford-based Aetna’s proposed purchase of Humana, which is based in Louisville, Kentucky, or efforts by Indianapolis-based Anthem to acquire Bloomfield, Connecticut-based Cigna Corp. If both mergers are completed, the industry’s five largest companies would be reduced to three.

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“When there is competition, that creates downward price pressure, and it also creates upward quality pressure,” Burwell said in a brief interview in Fort Dodge, Iowa. “We’ve always thought and talked about why competition is an important part of the overall picture, and that’s not just in the marketplace but overall for the nation in terms of our health care.”

Pushing the ACA

Burwell traveled to Iowa to highlight how the Affordable Care Act, also known as Obamacare, has improved care for Medicare patients. The act, one of President Barack Obama’s signature domestic policy accomplishments, has extended health insurance coverage to about 20 million people, primarily by expanding eligibility for Medicaid and creating new markets where individuals can buy health plans, often with subsidies. The merger review gives the administration another chance to help guide the future of U.S. health care.

Those new markets, known as exchanges, rely on private insurers to offer health plans. The Obama administration has had to contend with companies including Minnetonka, Minnesota-based UnitedHealth Group, the largest in the industry, exiting many markets after suffering losses. The president wrote an article published this week in the Journal of the American Medical Association suggesting that a so-called “public option” or government-run health plan could help increase competition in some markets.

“More can and should be done to enhance competition in the marketplaces,” the president wrote. “Congress should revisit a public plan to compete alongsideprivate insurers in areas of the country where competition is limited.”

Burwell said Friday in an interview in Des Moines that there are some markets where competition is “challenging,” without naming them. She said competition can foster innovation and create a healthy balance in negotiations among doctors, hospitals and insurers.

“Competition needs to be at a provider level and needs to be at an insurer level,” Burwell said. “When there’s competition in both settings, that creates an even playing field for both sets of players.”

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