Big insurance deal raises questions, fears

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.

A merger deal in the works between two of the nation’s largest health insurance companies is raising concerns that less competition could mean higher premiums for consumers and pay cuts for doctors.

Aetna announced earlier this month a $33 billion bid to acquire Humana — a move that would double Aetna’s enrollment in Georgia to roughly 1.4 million people. The deal would be one of the biggest health insurance deals of its kind.

Such an acquisition could lead to higher insurance premiums and contribute to an ongoing trend toward limiting a consumer’s choice of medical providers, experts say. The merger will get close scrutiny by state insurance regulators and the U.S. Department of Justice over its effect on competition and prices.

Meanwhile, the Medical Association of Georgia said this week that it has “grave concerns” about the merger and “is evaluating every option to protect physicians and patients in the state.”

An Aetna/Humana deal could increase premiums and ratchet down payments to doctors, said Donald Palmisano, the association’s executive director. The more competition among insurers, the lower the premiums, Palmisano added.

Consolidations have swept across the health care landscape in recent years, including insurers, hospitals and physician practices. Part of this change stems from the Affordable Care Act, which has increasingly pushed health care providers to improve quality of care or get penalized.

Other health insurers are also seeking to increase their size. Centene, the parent company of Peach State Health Plan in Georgia, has announced a proposed purchase of Health Net. And Anthem, parent of Blue Cross and Blue Shield of Georgia, has sought to snap up Cigna.

If the latter deal occurs, it would reduce the five large for-profit health insurers to three.

To further complicate the situation, UnitedHealthcare — one of the big five — is reportedly weighing a bid to acquire Aetna.

Aetna CEO Mark Bertolini said the insurer is ready for government examination of its Humana acquisition, and said it has already discussed possibly selling off some assets to satisfy regulators’ concerns.

Bertolini said the deal “will allow us to continue to invest in excellent service for our members and strengthen our partnerships with providers to deliver high quality care at an affordable price.”

Lots of scrutiny ahead

Georgia insurance regulators plan to perform “an in-depth analysis of the proposed transaction’s effect on competition in this state,’’ a spokeswoman said this week.

“After the review is done, the agency will hold a public hearing, Laura Wright said. Georgia Insurance Commissioner Ralph Hudgens “will make his decision based on the internal review and the hearing.”

Insurers see several advantages to big mergers.

The Affordable Care Act caps how much insurers can profit from the individual plans they offer and merging can help cut down on administrative costs. Also, as insurers get bigger and gain more members, they will have more clout when negotiating prices with hospitals and other medical providers, and getting better deals on prescription drugs.

Such insurance consolidation would significantly affect medical providers, said Bill Custer, a health insurance expert at Georgia State University.

It’s “too hard to tell” how consumer premiums may be affected, he added. Premiums are already rising “because the price of health care is going up.”

The deal will also have a major impact nationally on private Medicare plans known as Medicare Advantage, the Kaiser Family Foundation reported this week. Nearly 17 million Medicare beneficiaries, including more than 460,000 in Georgia, are enrolled in Advantage plans.

If combined, Aetna and Humana will have almost one-third of Medicare Advantage members in Georgia. That total would still trail UnitedHealthcare’s 49 percent share in the state.

Hospitals are skeptical

The almost frantic pace of consolidation in the health care business makes it hard to predict exactly the effects of such moves, experts say.

“The health industry is undergoing rapid change, and we have seen consolidation on both the health system side and the insurer side in recent years as these two forces jockey for market power,” said Cindy Zeldin of the consumer advocacy group Georgians for a Healthy Future. “Consolidation means fewer choices for consumers, and history shows that it can also result in higher prices.”

The Georgia Hospital Association sees potential trouble ahead with deals such as the one between Aetna and Humana.

“These type mergers could result in a significant increase in market power for the insurance companies while placing health care providers and consumers at a distinct disadvantage at the negotiating table,’’ association President Earl Rogers said in a statement this week. “Increased premiums may lead to even more individuals without access to affordable health care.”

Federal and state officials should examine this proposed merger very carefully, Rogers said.

State attorneys general may also look at the Aetna/Humana transaction.

A spokeswoman for Georgia Attorney General Sam Olens said that “the Law Department monitors antitrust activity, but I can’t comment on specifics.”