News that Anthem (ANTM) will buy Cigna (CI) for $54 billion– a deal that closely follows the proposed merger of Aetna (AET) and Humana (HUM) — will intensify regulators’ focus on antitrust issues in the health insurance industry.
Because Anthem’s proposed acquisition of Cigna creates the nation’s largest health insurer with 53 million customers, it’s already being met with a healthy dose of criticism from doctors and hospitals who say insurers are already squeezing them.
In particular, doctors and hospitals say insurers are narrowing their networks for customers who buy coverage on public exchanges under the Affordable Care Act. Though insurers say narrow provider lists allow them to keep costs low and ensure high quality doctors are on the menu of preferred providers and bad physicians are not, providers say they will be in greater danger of being shut out of a network if consumer choices dwindle.
“One of the main goals of the Affordable Care Act was to restore competition in the health insurance sector,” said David Balto, a former policy director at the Federal Trade Commission who is now in private practice in Washington. “This consolidation will reverse these gains of the Affordable Care Act.”
The deal would reduce the number of publicly-traded health insurance companies from five to three, assuming Aetna’s $37 billion purchase of Humana is approved. UnitedHealth Group (UNH) is currently the nation’s largest health insurer.
In Anthem’s case, the plan already is a defendant in a major antitrust lawsuit against Blue Cross and Blue Shield plans that has been consolidated into a class action wending its way through a federal court in Alabama. Anthem operates most of its commercial health insurance business under the Anthem Blue Cross Blue Shield brand.
The suit accuses the Blues plans of conspiring to fix what they pay doctors and other medical-care providers across the country. The Blues plans have denied the allegations.