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Antitrust Reform

Antitrust relief remains a high priority for physicians. Legislation is needed to enable physicians and other health care professionals to effectively negotiate with health plans without fear of violating antitrust laws. Physicians should be allowed to negotiate contract terms that increase patient choice and improve quality of care. Patients and their physicians should make informed decisions about their health care needs, not insurers.

On November 11, 2015, the AMA urged the US Department of Justice (US DOJ) to block the proposed Anthem-Cigna and Aetna-Humana health insurance mergers. The AMA believes that high insurance market concentration is an important issue of public policy because the anticompetitive effects of insurers’ exercise of market power pose a substantial risk of harm to patients. Our analyses of the proposed Anthem-Cigna and Aetna-Humana health insurance mergers reveal significant concerns with respect to the impact on patients in terms of health care access, quality, and affordability.  Reducing five national health insurance carriers to just three should be viewed in the context of the unprecedented lack of competition that already exists in most markets. Specifically, (1) greater consolidation leads to price increases, not to greater efficiency or lower health care costs; (2) highly concentrated health insurer markets limit patient choice; (3) dominant health insurers compromise physician-patient advocacy; and (4) payment to physicians below competitive levels undermines access and quality.

Background on proposed mergers

Why should the US DOJ block these two proposed mergers (Anthem-Cigna and Aetna-Humana)? The AMA believes there are five main reasons why these mergers should be rejected:

  • The proposed mergers are occurring in markets where there has already been a near total collapse of competition. Under the US DOJ/Federal Trade Commission Merger Guidelines, the proposed mergers are presumed to enhance market power in a vast number of commercial and Medicare Advantage markets. Because of persisting high barriers to entry in health insurance markets, the lost competition through these proposed mergers would likely be permanent and the acquired health insurer market power would be durable.
  • A growing body of peer-reviewed literature suggests that greater health insurer consolidation leads to price increases, as opposed to greater efficiency or lower health care costs. The proposed mergers can be expected to lead to a reduction in health plan quality. Insurers are already creating very narrow and restricted networks that force patients to go out of network to access care. The mergers would reduce pressures on plans to offer broader networks to compete for members and would create fewer networks that are simultaneously under no competitive pressure to respond to patients’ access needs.
  • Health insurer monopsony, or buyer power, acquired through the proposed mergers would, as the US DOJ has found in earlier cases, likely degrade the quality and reduce the quantity of physician services. Patients do best when there is a competitive market for purchasing physician services. When mergers result in monopsony power and physicians are reimbursed at below competitive levels, patients may be harmed in a variety of ways. Physicians may be forced to spend less time with patients to meet practice expenses. They also may be hindered in their ability to invest in new equipment, technology, training, staff, and other practice infrastructure that could improve the access to and quality of patient care and could enable physicians to successfully transition into new value-based payment and delivery models. Furthermore, in the long run health insurer exercise of monopsony power may motivate physicians to retire early or seek opportunities outside of medicine that are more rewarding. This would exacerbate an already significant shortage of primary care physicians in the United States.
  • There is no evidence supporting the insurer’s claim that the proposed mergers would lead to greater efficiencies and innovative payment and care management programs. There is also no economic evidence that patients benefit when health insurers merge to respond to hospital consolidation by acquiring countervailing power.
  • Fostering competition, not consolidation, benefits American patients through lower prices, better quality, and greater choice.

Federal and state advocacy opposing proposed mergers

Congressional action

Since the announcement of the proposed mergers, in addition to meeting with key staff from both the U.S. Senate and House of Representatives to discuss the anticompetitive effects that the proposed mergers would likely have on the nation’s physicians and their patients, the AMA also testified twice before the House Judiciary Committee to express our concerns:

Regulatory action

In addition to the AMA’s in-person engagement with key DOJ staff, on November 11, 2015, AMA filed comments with the US DOJ urging the agency to block the proposed Anthem-CIGNA and Aetna-Humana mergers.

Our work in 2016 is clear. AMA will intensify its efforts to convince the U.S. DOJ to block the mergers. Visit the DOJ, antitrust division website for additional information.

State action

The AMA has a state-based advocacy campaign to assist states in their local efforts. Members of the Federation may email the AMA to request access to this page. The AMA will continue to work with state medical associations in their engagement with the DOJ, as well as their state Departments of Insurance and State Attorneys General. Learn more about some recent state advocacy below:

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