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Advocates Urge Calif. Regulators To Scrutinize Health Plan Mergers

CALIFORNIA HEALTHLINE
http://www.californiahealthline.org/articles/2016/1/11/advocates-urge-calif-regulators-to-scrutinize-planned-insurer-mergers

Consumer advocates are urging California regulators to closely scrutinize proposed mergers between some of the nation's largest health insurers, the Los Angeles Times reports (Terhune, Los Angeles Times, 1/11).

Background

In July 2015, Anthem announced that it agreed to acquire Cigna for $48.4 billion. The combined company would have about 53 million customers, which would make it the nation's largest insurer in terms of enrollment (California Healthline, 11/12/15). It also would become the largest health insurer in California, surpassing Kaiser Permanente (Los Angeles Times, 1/11).

Also in July 2015, Aetna announced it reached a $37 billion deal to purchase Humana, which could make Aetna the nation's second-largest insurer (California Healthline, 11/12/15).

Shareholders of all four companies have approved their respective deals (Infantino, California Healthline, 12/16/15).

However, federal regulators must approve the proposals, and antitrust experts say the Department of Justice and state attorneys general are likely to scrutinize them closely. DOJ will review the proposals over the next year or longer (California Healthline, 11/12/15).

Advocates Call for Close Scrutiny

According to the Times, advocates say that the deals, if approved, would limit patient choice and increase costs.

Anthony Wright, executive director of Health Access, said, "As these insurers get bigger, Californians deserve assurances they will get better," adding, "While these mergers are in the interest of the insurers, there's little evidence that they actually benefit patients or our health system as a whole."

However, the insurers have said the deals could result in lower out-of-pocket costs for consumers.

Fran Soistman, executive vice president of government services at Aetna, said, "We intend to have a significant portion of these savings flow back to consumers through medical and pharmacy coverage that remains affordable, with lower out-of-pocket costs and better health outcomes."

Meanwhile, some advocates have raised concerns about access to providers.

Jamie Court, president of Santa Monica-based Consumer Watchdog, said, "It's completely reasonable to limit premium hikes, or you could require all of the networks to include more doctors." He added, "The question is whether regulators have the will to do it."

California's insurance regulators already have started conducting hearings on the mergers, and more are expected in the coming weeks.

Shelley Rouillard, director of the California Department of Managed Health Care, at a hearing last week said, "I can assure you [premium] rates are something that we will be looking at and considering as part of our review" (Los Angeles Times, 1/11).

For more on the hearings, see last week's "Capitol Desk" post.