Breaking the merger wave: Time for the government to keep insurer consolidations in check

Federal regulators must examine big plan coalitions such as Anthem-WellPoint.

Editorial. Dec. 1, 2003.

One of the big problems with managed care, as physicians see it, has been the incredible market power that health plans have garnered. As an AMA study showed earlier this year, in most metropolitan areas, one or two plans have a market stranglehold, essentially forcing physicians into a take-it-or-leave-it position when it comes to contract negotiations. Could things get any worse?

As it turns out, they can.

It's bad enough that the two largest controllers of Blue Cross Blue Shield plans, Anthem and WellPoint Health Services, announced on Oct. 27 a $16.4 billion merger to create the nation's largest health plan. On the same day, UnitedHealth Group -- itself the No. 1 plan until the Anthem-WellPoint merger is closed -- spent more than $1 billion to buy Mid Atlantic Medical Services Inc. in Maryland.

Yet what's even more unsettling is that the mammoth new WellPoint Inc. already is on record as saying they will hunt for more acquisitions. What companies they are, no one knows, but it's clear to financial analysts that managed care companies are entering a new wave of consolidation.

Not only would there be local domination, but also the possibility becomes more real for a few plans to gobble up competition and extend their dominance nationally, through big contracts with multistate employers.