Congress becomes latest battleground in merger fight

One witness compared large insurers, health systems to sumo wrestlers

During a House Judiciary Antitrust Subcommittee hearing on Thursday, health care professionals sparred over the effects of hospital and insurer mergers on the industry.

The subcommittee is investigating competition in the industry and how it would be affected by proposed mergers between Aetna and Humana, as well as between Anthem and Cigna. The deals would need to be approved by the Department of Justice.

Here's what would happen if the health plan mergers actually go through

Witnesses debate effects of mergers

Daniel Durham, EVP at America's Health Insurance Plans, said during the subcommittee hearing that consolidation in the health insurance industry could reduce costs by promoting competition. Durham said that insurers are trying to offset the "harmful impact of consolidation among hospitals and other health care providers" and that hospital mergers can lead to higher prices and increased premiums.

However, Thomas Greaney, an expert on health and antitrust law at St. Louis University, argued that even if a major insurer can negotiate better prices, "it has little incentive to pass along the savings to its policyholders."

Greaney further compared giant hospital systems and insurers to sumo wrestlers, testifying, "Experience suggests that a showdown between the sumo wrestlers may well result in a handshake rather than an honest wrestling match."

Barbara McAneny, a trustee of the American Medical Association, said that "the concentration of market power among a handful of nationwide insurers" could hinder providers' capability to care for patients, which could threaten the "health and safety of American patients."

And American Hospital Association CEO Rick Pollack defended hospital mergers, noting that it is difficult for some hospitals to comply with the ACA's shift toward value-based payments without joining forces. "Many small, stand-alone and rural hospitals are particularly in need of partners," Pollack said. He added, "The annual growth in hospital prices has been low and declining," even with mergers among the providers (Herman, Modern Healthcare, 9/10; Pear, New York Times, 9/10).

M&A—To What End? Five Characteristics of Intentional Strategy

We are in the midst of the most significant period of provider consolidation in the last 30 years.

The most successful M&A deals are focused on delivering a better product to patients and purchasers, rather than insulating the system from competition. Find out what separates these deals from the rest.

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