In a letter to the U.S. Department of Justice (DOJ) Antitrust Division, the AAI today outlined the myriad competitive and consumer concerns surrounding the proposed health insurance mergers of Aetna-Humana and Anthem-Cigna. The letter was written by AAI Advisor Tim Greaney, Chester A. Myers Professor and Co-Director, Center for Health Law Studies at the Saint Louis University School of Law, and AAI President Diana Moss.
The letter lays out detailed arguments and economic evidence as to why the proposed mergers would likely harm competition and consumers. These include why the DOJ should pay attention to consolidation in the healthcare supply chain designed (as are the insurance mergers) to leverage up bargaining power; the effects of the mergers on increasing market concentration to presumptively illegal levels in numerous markets, and evidence of higher premium and lower quality and innovation from past insurance mergers.
The letter to DOJ goes on to assess key issues surrounding the Aetna-Humana and Anthem-Cigna mergers, ranging from the importance of considering Medicare Advantage a distinct relevant market, in addition to commercial health insurance markets, the potential for reversing the benefits to competition achieved under the Affordable Care Act, and how existing contractual agreements could exacerbate the merger-induced loss of competition.
The AAI emphasizes why the enhancement of bargaining power as a rationale for the insurance mergers should be rejected by the DOJ, as well as any arguments that entry could assuage competitive concerns, or that regulation would constrain the exercise of market power post-merger. The letter concludes by noting that divestitures on a massive scale necessary to fully restore competition lost by the mergers would be difficult and impractical and impose burdens on enforcers and the judiciary.
Thomas (Tim) Greaney
Saint Louis University School of Law
Diana L. Moss, Ph.D.
American Antitrust Institute