On May 9, 2016, a coalition of consumer groups composed of Consumer Action, Consumers Union, Consumer Watchdog, Consumer Federation of America, US PIRG, Empower Missouri, the Missouri Budget Project, and the Missouri Health Advocacy Alliance filed comments to Missouri Director John M Huff regarding the proposed merger of Aetna-Humana. The purpose of these comments was to raise concerns about the merger and its impact on healthcare in Missouri and to commend the Department for holding a public hearing to evaluate the merger. Here are a number of specific points raised:
Under Missouri law, the Director, after a public hearing, can prevent any insurance merger if there is substantial evidence that the merger will substantially lessen competition in the state of tend to create a monopoly. The proposed Aetna-Humana merger will be anticompetitive.
The merger will put an end to what could be significant existing and future competition between Aetna and Humana in the Medicare Advantage (MA) market. In Missouri, a combined Aetna-Humana company would possess 52% of the MA market share, and many counties would be even more concentrated. Greene and Jackson Counties would be 61% and 80% controlled by the merged entity. Where Aetna and Humana compete in MA, premiums are lower.
The merger will reduce competition in various markets. A combination of Aetna and Humana would result in an entity with 33.2% Missouri market share in the individual Medicare Part D market and 21.7% Missouri market share in the fully insured employer group market. When combined with the announced Anthem-Cigna merger, the two new entities would be responsible for 54% of the market.
Both Aetna and Humana have violated numerous laws and regulations in Missouri. Their consumer protection violations include limiting certain visits to physicians, misrepresenting claims, misapplying copayments, providing the Department with incorrect information, and excluding various kinds of coverage. Both companies have had to pay fines, and Missouri consumers need assurances that these problems have been corrected.
The merger will lead to higher health care costs and insurance premiums. Studies have shown that when health insurers merge, there is almost always an increase in premiums. Unlike most other states, Missouri has no system for rate review and approval, so there is no effective means to stop the merged insurer from exercising its market power by charging higher premiums.
Proponents of the merger claim that this deal will lead to substantial efficiencies and innovation. However they have offered little detail about these supposed savings, and there is no evidence or scholarly study showing that such benefits from this acquisition will reach consumers.
Divestitures are a practical remedy for health insurance mergers. They are ineffective and usually fail to restore competition, and Aetna would have to divest over 49,000 lives in various Missouri markets. However, the Department can develop additional remedies to protect consumers.
To see the full comments submitted to Director Huff please click here.
To see the supplemental letter submitted to Director Huff please click here.
To see the comments submitted to Director Huff on behalf of the Missouri Association of Osteopathic Physicians and Surgeons, the Missouri Hospital Association, and the Missouri State Medical Association, please click here.
To see the comments submitted to Attorney General Koster on behalf of the Missouri Association of Osteopathic Physicians and Surgeons, the Missouri Hospital Association, and the Missouri State Medical Association, please click here.
To see the written testimony submitted to Director Huff on behalf of the Missouri State Medical Association, please click here.
To see the written testimony submitted by the Missouri Hospital Association at the May 16th hearing, please click here.
To see the written testimony submitted by Empower Missouri at the May 16th hearing, please click here.
To see the written testimony submitted by the Missouri Health Advocacy Alliance at the May 16th hearing, please click here.
The Missouri Department of Insurance rejected the Aetna-Humana merger on May 25th. To see the decision, please click here.
On June 28th, the Law Offices of David Balto sent a letter to the Missouri Department of Insurance urging the Department to hold a hearing on the Anthem-Cigna merger and asking to participate in the hearing. To see the letter, please click here.