Protecting Affordable Health Care In Ohio
by David Balto
Make no mistake, companies always merge to benefit their shareholders. Often consumers end up suffering through higher prices, less service and less choice. Consumers’ pocketbooks feel the pain from recent airline, media and healthcare mergers.
That’s why we have laws for the government to block harmful mergers. Four of the five largest health insurers plan to merger – Anthem-Cigna and Aetna-Humana. In Ohio the mergers will be reviewed by the State Attorney General and the Insurance Commissioner. They should just say no and block these deals.
The Ohio Department of Insurance, just like the Ohio Attorney General and the federal antitrust enforcement agencies, has the power to say no to any deal that would substantially lessen competition or tend to create a monopoly. What does that mean? It means that just like stated in the Hippocratic oath, the merger must “do no harm.” The result of the merger cannot be higher prices or lower quality.
These mergers must be in the best interest of the people. The best way for the Ohio Department of Insurance to ensure this is to utilize all of its statatory powers and hold a public hearing where the public can learn on the cost and benefits of these deals. Justice Brandeis said that transparency is the best medicine and these deals need a heavy does of transparency.
Hardworking every day Ohioans rely on health insurance to keep themselves and their families healthy. A portion of their hard earned wages goes to these companies that, in turn, allow them access to physicians and hospitals for much needed care. It is our moral responsibility to ensure quality care to policyholders and to hold insurance companies accountable when bureaucrats try to change, alter or eliminate care.
These proposed mergers would substantially reduce competition in Ohio in a number of different insurance products including commercial and Medicare Advantage markets. A combination of Anthem and Cigna would create a company with just under 60% share of the ASO market, and a combination of Aetna and Humana would have a 50% market share in Medicare Advantage.
Virtually every credible study and analysis of past mergers shows that health insurance mergers lead to increased premiums, decreased quality, and decreased innovation. This happens even when antitrust enforcement authorities try to “fix” bad deals by imposing remedies on the merging companies. Studies show these fixes fail, and consumers suffer.
There is also little, if any, evidence that consumers benefit from any of the claimed savings merging companies claim will result from the merger. This makes sense, companies are more likely to pocket savings instead of lowering prices when there is no competitive pressure.
The Ohio Campaign for Consumer Choice has heard from individuals and organizations that are worried that these acquisitions will further reduce network adequacy. This is already a significant problem within Ohio; a recent study found that 60% of all individual plans offered in Ohio use narrow networks that only include 25% or fewer of all area providers.
These acquisitions will also render it more difficult for new competitors to enter the health insurance markets. In Ohio, entry on the health exchange or within the Medicare Advantage market has been very limited, and there has been no evidence of entry in other markets.
History has shown that consumers lose when insurers get bigger: consumers pay higher premiums, are made to suffer through limited networks, and end up receiving worse service. The proposed consolidation of health insurers will affect millions of Ohioans. These mergers will do away with competition, a critical component to improving care, lowering costs, and promoting access and choice.
These mergers will create new, dominant insurance entities that have no incentive to improve care. Industry experts have suggested that these mergers could “undercut” the critical innovation efforts needed to improve health care, which would not only harm consumers as insurers compete less with providers to offer new insurance products, but that concentrated insurance markets often have less innovative offerings. With less competition to bring innovative healthcare to customers, we will likely see a decrease in quality of care and a lack of access to innovative products that often deliver better care at lower costs.
The Ohio Department of Insurance should exercise its full powers, including holding public hearings, to protect consumers and determine if these mergers are in the public interest.