New York health plan merger sparks fears of insurer monopoly

New York City fails in its attempt at a restraining order. Doctors say the deal would hurt their ability to negotiate fair contracts.

By Amy Lynn Sorrel, AMNews staff. Dec. 18, 2006.

New York physicians worry that bigger will not mean better for patient care if the merger of two health plans into the state's largest insurer is allowed to stand.

A federal judge Nov. 14 rejected New York City's request for a temporary restraining order to prevent the companies from joining. The ruling came just one day after city officials sued Health Insurance Plan of New York and Group Health Inc. to stop their union. The city claimed that it would create a monopoly of insurance options for public employees in the metropolitan region and that the firms would raise prices because their competitors are more expensive.

Doctors fear that the deal will make it difficult for them to negotiate adequate reimbursement with the merged plan and hinder their ability to provide quality medical care.

The American Medical Association and the Medical Society of the State of New York last year sent a letter to the U.S. Justice Dept. and the New York State Insurance Dept. asking regulators to scrutinize the merger's impact.

The combined company's commercial market share is 33% statewide. Group Health was already the state's largest health insurer, with a 25% market share. In the New York City area, where HIP's business is centered, Group Health's and HIP's combined market share also is 33%, compared with HIP's 20% before the merger.

"Less competition means less choices for patients, and it leads to one-sided contracts given to physicians on a 'take it or leave it' basis," said Donald Moy, MSSNY general counsel. The physician groups are not involved in the city's lawsuit but are keeping an eye on it, he said.