The Wall Street Journal
The chief executives of Aetna Inc. and Anthem Inc. defended their merger deals before a Senate subcommittee, facing sharply critical testimony that raised questions about the impact of health-insurance consolidation.
Aetna is seeking to acquire Humana Inc., in a $34 billion transaction focused largely on the private Medicare plans known as Medicare Advantage. Anthem aims to take overCigna Corp. in a $48 billion deal. The two deals together would shrink the top five U.S. health insurers to a big three, each with annual revenue of more than $100 billion. The third player would be UnitedHealth Group Inc.
In their testimony before the Senate Judiciary subcommittee on antitrust, Mark T. Bertolini of Aetna and Joseph R. Swedish of Anthem emphasized that health care is delivered largely on a local basis, and they argued that markets would remain competitive if they completed their mergers. Both CEOs also said their deals would benefit consumers and encourage new forms of payment to health-care providers.
Mr. Bertolini said just 8% of Medicare beneficiaries would be covered by the combined Aetna-Humana, and “robust competition will remain in the Medicare market.” Mr. Swedish said Anthem and Cigna had “very limited and, in most cases, no market overlap.”
But other witnesses were skeptical of the deals’ potential benefits. Leemore Dafny, a professor at Northwestern University’s Kellogg School of Management, said consumers are “paying a premium on our premium” because of lack of competition among insurers.Richard J. Pollack, CEO of the American Hospital Association, said his group was concerned the insurance deals would reduce choices and raise costs for consumers.
Sen. Al Franken, a Minnesota Democrat, grilled the two insurance CEOs on whether they would commit to passing along any savings from their deals to consumers, asking repeatedly for such a pledge. After the question was repeated three times, Mr. Bertolini said the “savings will be passed along in the price of our products.” Mr. Swedish also promised savings. But Sen. Franken noted that he ran out of time to continue, and said, “We could have gone quicker if those answers were yes.”