---

Press the print button on your browser.
Click here to return to the previous page.

AMA to Congress: Health insurance mergers harm patients, physicians

Remarks delivered to U.S. House Committee on Small Business

For immediate release
Oct. 25, 2007

Statement attributable to:
William G. Plested, MD
Immediate Past President

“Thank you, Madame Chair (ranking member, Chabot) and members of the Committee on Small Business. My name is Bill Plested. I am the Immediate Past President of the American Medical Association and a thoracic and cardiovascular surgeon from Santa Monica, California.

“I want to thank you for inviting me to testify today and for holding a hearing on this important issue—health insurer consolidation.

“Unfortunately, some health insurers are abandoning the goal of providing patients with honest physician comparisons based on valid quality criteria. A growing number of health insurers have unwisely pushed ahead with unproven economic criteria to rank physicians. These flawed rankings are often financially motivated to inappropriately influence or restrict a patient’s choice of a physician.

“Consolidation in the health insurance market is critical to the AMA because physicians are both patient advocates and small business owners. Physicians have primary responsibility for advocating on behalf of their patients for the most appropriate medical care. In addition, the majority of physician practices are small businesses that want to provide health insurance coverage to their employees. Physicians’ ability to perform either of these vital functions, however, has been severely compromised by growing consolidation in the for-profit health insurance market. This consolidation has left physicians with little leverage against unfair contract terms that deal with patient care and little control over their own employees rising health insurance premiums.

“As you well know, a market performs optimally when consumers have a choice of competing products and services. Increasingly, however, choice in the health insurance market has been severely restricted as health plans have pursued aggressive acquisition strategies to assume dominant positions. In the past decade, there have been over 400 mergers. Contrary to claims of greater efficiencies and lower costs, these mergers, in fact, have led to higher premiums and decreased patient access to care. If this current trend continues, we fear it will lead to a health care system dominated by a few companies that, unlike physicians, have an obligation to shareholders, not to patients.

“Our worst fears may be realized in Nevada where we have urged the Department of Justice to block the merger of UnitedHealth Group and Sierra Health Systems. This merger would have a devastating impact on Nevada’s patients and physicians, and would reverberate throughout the health care system as a harbinger of unrestricted consolidation.

“It will drastically reduce competition and severely limit health insurance choice for employers and individuals in Nevada. The United-Sierra merger would give United 94 percent of the HMO market in Clark County and 80 percent of the HMO market in the entire state of Nevada.

“Nevada is in need of more competition, not less. The state currently ranks 47th in the country for access to care and 45th in access to physicians. This merger would push Nevada even further down these lists by exacerbating physician shortages. Competition is essential to the delivery of high quality health care services. This merger will serve only to further disadvantage an already challenged Nevada health care system.

“Consolidation is not benefiting patients. Health insurers are posting record high profits, while patient health insurance premiums continue to rise. In fact, United and WellPoint have had seven years of consecutive double-digit profit growth that has ranged from 20 to 70 percent year-over-year.

“In addition to the compelling results of the AMA’s annual Competition Study, many areas across the country exhibit characteristics typical of uncompetitive markets and growing monopolistic behavior. These include significant barriers to entry for new health insurers; the ability of large, entrenched health insurers to raise premiums without losing market share; and the power of dominant health insurers to coerce physicians into accepting unreasonable and unjust contracts.

“The AMA believes that the federal government must take steps to address the serious public policy issues raised by unfettered health insurer consolidation. The current situation in Nevada is emblematic of the total absence of boundaries and enforcement currently applied to health plan mergers. Therefore, we encourage this Committee to urge the DOJ to enjoin the merger of United and Sierra. By so doing, the Committee would be taking a meaningful step, on behalf of America’s patients, towards correcting the existing inequities in the health care market.”

###

For more information, please contact:

Mollie Turner
AMA Media Relations
(202) 789-7430

---