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Too soon for Aetna, Anthem to declare victory in merger review process


When it comes to the rigorous review process that major industry mergers must face, how soon is too soon to declare victory?

Personally, I would argue that any time before the Department of Justice (DOJ) makes an official decision is "too soon." Then again, this is Washington, where speculation is as much of a beloved pastime as happy hours and looming government shutdowns.

So it was hardly surprising when after Tuesday's Senate subcommittee hearing on the two pending health insurer mergers--Aetna-Humana and Anthem-Cigna--reporters and industry analysts were eager to assign winners and losers.

Their verdict: Score one for the CEOs.

"What struck us most about the proceedings was the balanced nature of the discourse and questions," market analyst Brian Wright said of the deals, according to the Wall Street Journal. "There were no heated exchanges or real sparks."

To Leerink Research analyst Ana Gupte, notes the WSJ, the hearing indicated that the "merger approval looks less likely to face political hurdles."

I think those assessments have merit, but it's important to take them with a grain of salt. On the one hand, after a short recess during the hearings, Aetna CEO Mark Bertolini came back in the room and could be heard saying confidently, "we're getting all the questions that we expected."

But it's not as though every senator let Bertolini and Anthem CEO Joseph Swedish off easy. Sen. Al Franken (D-Minn.) left little doubt about his skepticism of the deals' merits. To drive home the point, he repeatedly asked both CEOs if they would commit to passing merger-achieved savings onto consumers, chiding them each time they tried to talk their way around giving a direct answer.

And Franken wasn't the only lawmaker to share his concern. Sen. Richard Blumenthal (D-Conn.) started off his round of questioning with a spiel about how he's "deeply troubled" by evidence that health insurer consolidation does not benefit consumers. Amusingly, he also likened the mergers to the institution of marriage, saying they represent "the triumph of hope over experience."

For her part, Sen. Amy Klobuchar (D-Minn.) seemed dubious that neither Aetna nor Anthem could achieve the efficiencies the companies seek without acquiring other insurers.

What the industry analysts may be alluding to, though, is the fact that tone of the proceedings was primarily one of academic curiosity. LifeHealthPro put it another way, dubbing the hearing "dull."

Here's what I saw: The senators, hardly experts on the insurance industry, seemed eager to glean insights from the varying perspectives of the expert witnesses. In short, they were doing their jobs.

It was a marked contrast to a previous House subcommittee hearing, in which lawmakers felt compelled to take breaks from witness-questioning to bash the Affordable Care Act and/or fight about whose turn it was to speak. Basically, the two hearings showed the difference between the Sentate and the House, also known, respectively, as the sophisticated older sibling and the simpering younger sibling.

But I would be cautious about inferring too much from the senators' calm demeanor during Tuesday's hearing. Just because they didn't yell at anyone doesn't mean they weren't skeptical of the deals.

And either way, the final verdict on the mergers isn't up to them--it rests in the hands of the DOJ. Its review process is methodical and evidence-based, and it has shown, in the case of the proposed Comcast-Time Warner merger, that it is not afraid to block deals it deems anticompetitive.

So sure, maybe lawmakers won't go on a crusade over these deals--after all, they're pretty consumed by Planned Parenthood at the moment. But those in favor of the two insurance mega-mergers probably should wait a bit before cracking open the champagne. - Leslie @HealthPayer

Related Articles:
3 burning questions about the major insurer mergers
Senate panel grills Aetna, Anthem execs on merger deals
Lawmakers, industry leaders clash over effects of healthcare consolidation
Partisan bickering distracts from real healthcare policy issues
All eyes on how regulators will respond to massive health insurer mergers