Big insurance deals are bad news

The past decade has witnessed dramatic consolidation in every dimension of the metro Atlanta health care market. Spurred by changes from the Affordable Care Act, hospitals are hastily marrying each other and buying up smaller medical practices in their quest to expand.

Dr. Deep Shah
Dr. Deep Shah

Such activities tend to increase costs by 20 percent or more in an already concentrated market like ours.

But two recently proposed insurance mergers – Anthem-Cigna and Aetna-Humana – may have more impact. They would represent unprecedented consolidation of Georgia’s health insurance market.

Adding Cigna beneficiaries to Anthem-owned Georgia Blue Cross and Blue Shield of Georgia would boost its total enrollment to nearly 3.6 million. Aetna’s takeover of Humana would bring its membership to some 1.4 million.

Together, the two megacorporations would be responsible for half of the state’s insured population. The number of large commercial insurance carriers in Georgia would be reduced from five to three.

Combined with recent hospital mergers and acquisitions, the creation of these new insurance powerhouses would leave our community’s health in the hands of an oligopoly.

What would the health insurance companies’ strengthened market positions mean for Georgia’s businesses and ordinary citizens?

1. Lower wages: Increased costs for employers will ultimately be shifted to employees.

2. Higher premiums and deductibles: Consider that under the current system, with five large commercial insurers, premiums in Georgia are set to rise 8 percent to 29 percent in 2016. These rates will likely increase more steeply once there is less competition.

3. Small provider networks getting even smaller: Consider that 83 percent of plans currently offered through the Georgia health insurance marketplace limit patients to narrow or very narrow networks. More leverage for insurers will likely worsen this problem.

The American Hospital Association and the American Medical Association (AMA) have convincingly shown that further consolidation in the health insurance market will narrow patient choice, shrink access to care, and inflate costs for patients and employers nationwide.

Compared to other states, Georgia is at even greater risk of adverse outcomes. The AMA’s September 2015 analysis of the mergers demonstrated that Georgia and Kentucky are the only two states in which both the proposed mergers would 1) enhance the companies’ market power and 2) dampen competition.

The inevitable premium hikes will make purchasing coverage unaffordable for individuals and business owners. And many providers – forced to accept unfair payments from the newly formed monopolies – will lose the ability to expand, innovate and improve care for their patients.

‘Sumo wrestlers’

If we doubt these consequences, we can examine the effect that mergers have had on Georgia’s hospital market.

As a February 2015 investigation by WSB-TV revealed, patients treated at metro Atlanta outpatient clinics bought by large hospitals are now being charged double and triple for the same services, including outpatient chemotherapy. Why? Consolidation has strengthened hospitals’ market power and bargaining power with insurance companies.

Healthcare Cost

Now imagine how much worse it will be if the already large commercial insurers combine into virtual monopolies.

“Experience suggests that a showdown between the sumo wrestlers [i.e., large hospitals and insurance companies] may well result in a handshake rather than an honest wrestling match,” health and antitrust law expert Thomas L. Greaney said Sept. 10 at a U.S. House Judiciary Committee hearing on the state of competition in health care. As he emphasized, “[the insurer] has little incentive to pass along the savings to its policyholders.”

If federal regulators approve the Anthem-Cigna and Aetna-Humana mergers, a few insurance companies – negotiating with a handful of large hospital-owned systems – could dictate access, choice and costs for individual Georgians and put further strain on businesses.

That would leave it up to the Georgia General Assembly and the state’s insurance commissioner to step in and scrutinize the deals. An honest assessment would likely reveal the potential for greater harm than most people anticipate.

For the good of patients, providers, and our local economy, these mergers should be halted.

Deep Shah, MD, MSc, is a senior medical resident at Emory University School of Medicine and an active member of the American College of Physicians’ Georgia chapter.  A native Atlantan and American Rhodes Scholar, Dr. Shah plans to practice primary care in metro Atlanta. Follow him on Twitter @DeepShahMD. Views expressed in this Commentary are his own.