The U.S. Department of Justice is throwing the antitrust book at Indianapolis-based Anthem’s effort to acquire Bloomfield, Connecticut-based Cigna Corp., and Hartford-based Aetna’s effort to wed Humana.
Hospitals, the American Medical Association, patient groups, and the California insurance commissioner have all made passionate arguments about why federal regulators should block the deals.
Agents and brokers may have mixed feelings about these deals. They may hate the idea of meddlers from Washington using the Affordable Care Act to turn health insurers upside down. But at the same time, some health insurers seemed to back the idea of setting up the ACA public exchange system because they saw it as the fulfillment of an age-old dream to use technology to push agents’ sales commissions out of the income statement.
So, are there any reasons we should want to see giant health insurers complete giant deals? For some ideas, read on:
Pharmaceutical companies are the darlings of Wall Street, and many scientists’ sugar daddies (Photo: Thinkstock)
1. The drug companies are big, and have patents.
America’s Health Insurance Plans has been giving the Pharmaceutical Research and Manufacturers of America — PhRMA — a run for its lobbying money in the past two years, but the big U.S. drug manufacturers are some of the biggest companies in the world. They have used their patents, or temporary monopolies on their ability to sell certain drugs, to drive up U.S. prices on drugs, even when the patents have expired.
They are so big they have gotten major pricing protection provisions in the Trans-Pacific Partnership trade pact. They have a direct and indirect influence on what may look like an independent health care system research, because they and the smaller biotech companies they support are major sponsors of all kinds of health care research.
Some of the biggest U.S. publicly traded companies are hospital companies. (Photo: iStock)
2. The hospitals are big.
Hospital companies such as HCA Corp. and Tenet Healthcare are enormous, and getting bigger. HCA, for example, has a market capitalization, or total stock-based value, of about $32 billion.
Many hospitals have their communities to themselves, or split the market with just one or two major competitors, and many are buying up the most attractive physician practices.
Even children know that pills and hospitals can help sick people. (Photo: Thinkstock)
3. What drug companies and hospitals do is easy for consumers to understand.
Aside from the fact that drug companies and hospital companies are big gorillas, they are gorillas with strong consumer relationships.