The giant health insurance mergers now on the table would reduce the number of major national insurers from five to three.
John Oxendine, Georgia’s former insurance commissioner, believes that a Big Three is not enough for a competitive balance.
“My personal opinion is that it would be very bad for consumers,” Oxendine said last week in an interview.
The two deals – Aetna buying Humana and Anthem buying Cigna – were announced in July. The former would double Aetna’s size in Georgia, while the latter would add to Blue Cross and Blue Shield of Georgia’s big membership lead over other insurers in the state. Anthem is Blue Cross’ parent company.
UnitedHealthcare is the other giant national player.
Oxendine, of Gwinnett County, was insurance commissioner from 1995 to 2011. Ralph Hudgens, also a Republican, succeeded him in 2011 and is now in his second term.
A spokeswoman for Hudgens said he will have the same process for each merger – including a department review and public hearings – but that they will be done separately.
Oxendine says he hasn’t discussed the deals with Hudgens but believes commissioners in every state “should be extremely concerned” about the two mergers. They should look at both deals in tandem, not separately, he added.
“Prices are already going up’’ under the Affordable Care Act, he said.
Insurers have been pursuing such big deals in order to cut costs and increase their clout in negotiations with medical providers and for better pricing on pharmaceuticals.
Oxendine approved WellPoint’s acquisition of the parent firm of Blue Cross and Blue Shield of Georgia, completed in 2001, and Aetna’s purchase of Prudential, finalized in 1999. But he says those deals were different.
The WellPoint deal, Oxendine said, did not affect competition because WellPoint had no operations in Georgia at the time. And Prudential was a small health insurer in Georgia when Aetna bought it, he said.
Graham Thompson, executive director of insurer trade group the Georgia Association of Health Plans, defended the insurers’ latest moves, saying that they will go through much tougher scrutiny than mergers between hospitals.
Aetna and Anthem are looking to diversify their portfolios of insurance offerings in their respective deals, he said. “They’re trying to become more well-rounded.”
Health insurers are now under federal restrictions that they must spend at least 80 percent of their premium dollars on medical care and quality improvements. “It’s a much different game,” Thompson said. “We submit our rates well in advance. Hospitals can charge more, as can physician groups.”
The consumer group Georgians for a Healthy Future says it wants to have input in the insurance merger reviews.
Consolidation “is happening really fast across the industry,’’ said Cindy Zeldin, executive director of the group. “We want to be engaged in this. It will have a big impact on consumers.”
This story was done in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation. Andy Miller is the CEO and editor of Georgia Health News.
