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Lawmakers, industry leaders clash over effects of healthcare consolidation

Payer and provider mergers the subject of house committee hearing

While politicians and industry experts who spoke at a congressional hearing Thursday were divided about whether the Affordable Care Act is driving healthcare industry consolidation, nearly all agreed on one point: They are deeply concerned about the pending health insurance mergers.

The hearing, held at the Rayburn House Office Building in the District of Columbia, was what House Judiciary Committee members described as just one among a series of hearings about the state of competition in the healthcare marketplace.

The ACA entered the discussion early on, starting with the opening statement from Regulatory Reform, Commercial and Antitrust Law Subcommittee Chairman Tom Marino (R-Pa.). Marino argued that the healthcare reform law has spurred consolidation among payers and providers and said he has "infinitely more" trust in the judgment of the marketplace compared to the judgement of the government.

Judiciary Committee Chairman Bob Goodlatte (R-Va.) agreed, calling for "continuous and vigilant oversight" to preserve competition. Indeed, industry consolidation is not a response to market forces but a result of deliberate policy provisions in the ACA, Scott Gottlieb M.D., a resident fellow of the American Enterprise Institute, testified.

But ranking subcommittee member Henry Johnson (D-Ga.) didn't see it that way, saying that the ACA is a reaction to, not a cause of healthcare marketplace consolidation. Johnson and Marino's views clashed so strongly that at one point, the two even got into a verbal tiff about Johnson's desire to compel a witness to answer his question.

Meanwhile, in his testimony, Thomas Greaney, a St. Louis University School of Law professor and expert on healthcare an antitrust law, called it "entirely erroneous" to claim the ACA is responsible for consolidation within healthcare markets. Still, Greaney expressed strong skepticism about the notion that insurers merging to gain more market power will help consumers by giving payers more clout to negotiate prices with providers. More often than not, he noted, "Sumo wrestlers would rather shake hands than compete."

Also coming out strong against the proposed Aetna-Humana and Anthem-Cigna mergers were two representatives from the provider community: American Hospital Association (AHA) President Richard Pollack and Barbara McAneny, M.D., a member of the American Medical Association's (AMA) Board of Trustees.

Building on the AMA's report this week that detailed the anticompetitive effects of the proposed insurer consolidation, McAneny stressed that in the federal government's review of the mergers, "the health and safety of American patients is at stake." And, she adds, if the Department of Justice (DOJ) decides to approve the deals, "there is no going back."

Pollack, however, defended consolidation among providers as a necessary response to the ACA's focus on population health management and the transition to value-based care. Like McAneny, he also reiterated the AHA's "serious concerns" about the mergers. The AHA has already submitted letters to the government criticizing both mergers.

The lone voice in favor of the pending mergers came from Dan Durham, executive vice president of strategic initiatives for America's Health Insurance Plans. Health plans collaborate in order to improve the lives of their members, he said, adding that "many mergers and acquisitions are beneficial to consumers."

For example, many mergers create efficiencies that drive down costs, he said, and when two organizations with different areas of expertise combine, the combination of their shared institutional knowledge can help the company better serve consumers.

Still, he expressed faith in the DOJ's examination of the proposed deals, noting that industry consolidation should be looked at on a case-by-case basis.

Related Articles:
American Medical Association: Insurer mergers would diminish competition
Hospital group: Aetna-Humana merger would lessen Medicare Advantage competition
American Hospital Association takes aim at Anthem-Cigna merger
CEO Mark Bertolini: Humana deal will help Aetna compete in consumer-driven marketplace
All eyes on how regulators will respond to massive health insurer mergers