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Hospital group: Aetna-Humana merger would lessen Medicare Advantage competition

American Hospital Association issues second letter criticizing health insurer consolidation

The American Hospital Association (AHA), which already has expressed its concerns about the pending merger between Anthem and Cigna, now has done the same for the Aetna-Humana merger.

The powerful hospital lobbying group makes its case in a letter to Department of Health and Human Services Secretary Sylvia Mathews Burwell and William Baer, the assistant attorney general for the Department of Justice's Antitrust Division.

The group's primary concerns about the Aetna-Humana deal center on the merger's implications for the Medicare Advantage (MA) program.

It cites a recent report that found MA markets in 97 percent of U.S. counties already have little to no competition, adding that an Aetna-Humana acquisition "likely would serve only to exacerbate problematic coverage and cost trends as well as produce other adverse impacts on access and innovation."

If the deal is approved, it would substantially lessen competition in 1,083 counties with more than 2.7 million Aetna and Humana members enrolled in MA plans, the letter states.

Indeed, Humana's MA market share made it an attractive target for acquisition, and following the announcement of the deal, Aetna CEO Mark Bertolini wrote in a memo to employees that the merger presents an "especially compelling" opportunity to expand its MA business. He also has said, however, that an Aetna-Humana combined company would only control 8 percent of the Medicare market.

The AHA notes that its issues with the Aetna-Humana deal are "similar in many respects" to its criticism of the Anthem-Cigna deal, adding that "the two deals would reduce the number of major health insurers from five to three and adversely impact millions of consumers."

And as it argued in its letter regarding the Anthem-Cigna deal, the AHA expresses doubt that divestitures would be able to mitigate the anticompetitive effects of a merger between Aetna and Humana.

"The scope of the likely competitive harm here is so broad and so deep that the amount of divestitures required to preserve and grow competition may not be feasible from a practical standpoint or even preserve the purported business benefits of the transaction," the letter says.

To learn more:
- here's the letter (.pdf)

Related Articles:
American Hospital Association takes aim at Anthem-Cigna merger
In memo to employees, Aetna CEO lauds deal with Humana
CEO Mark Bertolini: Humana deal will help Aetna compete in consumer-driven marketplace
Competition hard to come by in Medicare Advantage markets