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ADA supports the AMA’s efforts to block insurance mergers

December 16, 2015

By Kelly Soderlund

ADA leaders sent the American Medical Association a letter of support for its efforts opposing the mergers of insurance giants Aetna/Humana and Anthem/Cigna.

In a letter to the U.S. Department of Justice, the AMA contends that the mergers would nearly eliminate competition, increase the cost of health care and decrease the quality of care for patients. On July 3, 2015, Aetna announced it would acquire Humana to create a $37 billion combined entity. Anthem announced July 24, 2015, its proposed acquisition of Cigna in a $54.2 billion deal. Both acquisitions are pending approval from state departments of insurance and the U.S. Department of Justice Antitrust Division.

Dr. James Madara, executive vice president and CEO of the American Medical Association, sent a letter Nov. 11 to William Baer, assistant attorney general for the U.S. Department of Justice Antitrust Division, expressing “significant concerns with respect to the impact on consumers in terms of health care access, quality and affordability.”

“The AMA has concluded that these mergers are likely to impair access, affordability and innovation in the sell-side market for health insurance, and on the buy side, will deprive physicians of the ability to negotiate competitive health insurer contract terms in markets around the country,” Dr. Madara wrote. “The result will be detrimental to consumers.”

ADA President Carol Gomez Summerhays and Kathleen O’Loughlin, ADA executive director, wrote Dr. Madara a letter Dec. 9 supporting the AMA’s position that these mergers would diminish competition in the marketplace.

“We note that all four companies are national players with a significant number of beneficiaries within their standalone dental product lines,” Drs. Summerhays and O’Loughlin wrote. “As you note in your letter, for a clinician, the doctor-patient relationship is by far the most important practice consideration. This relationship, highly valued by both doctor and patient will be adversely affected without guarantee of any benefit for the doctor or the patient.”

The ADA Council on Dental Benefit Programs is monitoring the progression of the insurance mergers.

Photo of Dr. Ronald Riggins
Dr. Riggins
“The council wanted to express our solidarity with our medical colleagues advocating against these mergers,” said Dr. Ronald Riggins, council chair. “We will continue to monitor this trend and keep our membership apprised of the impact in the event these mergers are approved.”

In Dr. Madara’s letter, he contended that the proposed mergers are occurring in markets where there has already been a near collapse of competition. He also states that “a growing body of peer-reviewed literature suggests that greater health insurer consolidation leads to price increases, as opposed to greater efficiency or lower health care costs. The proposed mergers can be expected to lead to a reduction in health plan quality.”

The buying power the insurance companies would gain through the mergers would likely “degrade the quality and reduce the quantity of physician services. Consumers do best when there is a competitive market for purchasing physician services,” Dr. Madara wrote.

The AMA has participated in Congressional hearings on the proposed mergers and analyzed the likely competitive effects, its own data on competition in health insurance, recent studies on the effects of health insurance mergers, the testimony of experts who testified and the written submissions and testimony of the merging parties, according to the AMA letter.

“Accordingly, the AMA urges the Department of Justice to block the proposed mergers,” according to the AMA letter.