WADA Denounces Decreased Payers Competition Amid Growing Antitrust Interest in Washington


Dive brief:

  • U.S. health insurance markets have become increasingly concentrated over the past five years, according to a new report from the American Medical Association, which argues that payor mergers and acquisitions lead to higher costs and fewer costs. ‘care options for patients, but largely excludes the impact of provider consolidation in driving these trends.
  • Almost three quarters of metropolitan statistical regions were highly concentrated in 2020 according to the federal guidelines used by the Department of Justice and Federal Trade Commission, up from 71% in 2014. Among the markets that were already very concentrated in 2014, 54% became more so last year, while 26% of markets that were not very concentrated will become so. by 2020, WADA said.
  • The medical association’s study is the latest salute in a courier war between provider and payor lobbies as they scramble to blame the rapidly rising medical costs in the United States.

Dive overview:

Decades of consolidation among providers and payers have contributed to the rapid rise in healthcare costs, with both sides saying the lion’s share should fall on the other as Washington seeks a more stringent approach in mergers and acquisitions regulation.

However, studies of hospital and health insurer consolidation tend to find that mergers and acquisitions in the two sectors result in higher costs for consumers without a corresponding increase in the quality of care or the coordination of care.

WADA’s latest research comes as rumors circulate that Humana is interested in acquiring Centene. Speculation, based on gossip that a Humana private jet was spotted at Centene’s headquarters in St. Louis and reported by StreetInsider, picks up on similar speculation two years ago that Humana ultimately shut down in a statement with the Securities and Exchange Commission.

But the consolidation of large health insurers has been rare since the DOJ opposed the mergers of Anthem and Cigna and Aetna and Humana in 2016.

Instead, the most recent market concentration has occurred as health plans leave relevant markets, leaving more to the companies that remain.

Recent insurer mergers and acquisitions are more likely to be vertical, as payers seek to take over physician offices, pharmacy benefit managers, and pharmacy integrated into PBMs. Such deals are easier to sell for regulators because the entities do not compete directly against each other, although anti-competitive hawks have expressed concerns that mergers and acquisitions could also hamper competition and raise prices.

AMA Study Analyzes Market Concentration and Payers Market Shares for Over 380 Metropolitan Areas, All 50 States and Washington, DC

It also presents the national market shares of the 10 largest payers in the United States for the first time in the history of the study in two decades, using data obtained from the Decision Resources Group.

According to the research, the insurers with the highest market share in the most MSA-level markets were Anthem with 80 MSA, Health Care Service Corp. with 44, UnitedHealth Group and Blue Cross Blue Shield of Florida with 22 MSA each, and Highmark and Kaiser, each with 20.

In 2020, 14 US states had only one health insurer with a 50% or more share of the commercial health insurance market. The 10 states with the least competitive commercial health insurance markets were Alabama, Michigan, Louisiana, South Carolina, Hawaii, Kentucky, Alaska, Illinois, North Dakota and the ‘Oklahoma.

In almost all MSA-level markets (91%), at least one insurer had a commercial market share of 31% or more, while nearly half of MSAMid-tier markets had an insurer with a 50% or greater share last year.

The report cites external research concluding that a lack of market competition among insurers results in higher premiums and lower amount of coverage than in a competitive market, as well as provider payments and an amount of care. health below competitive levels.

Additionally, horizontal mergers give payers a stronger position when it comes to purchasing medical services, which could lower the prices paid to physicians. The DOJ has challenged three major insurer mergers in the past over this concern, including its complaint filed in tandem with several state attorneys general in 2016 to block Anthem’s proposed acquisition of Cigna.

This lawsuit helped the payers eventually abandon the merger about a year later.

The report comes as the Biden administration redoubles its scrutiny, with the president signing an executive order in July calling on the DOJ and the FTC “to vigorously enforce antitrust laws” in healthcare and other key industries. The FTC has also said it is prioritizing healthcare as part of its enforcement strategy over the next decade, following what critics have called laxity on the part of the administration. Trump.

Specifically, regulators have called supplier mergers a primary focus, which research has shown to exceed agreements with payers in the United States in recent years.

As a result, the American Hospital Association sent a letter last month to senior White House, HHS, DOJ, and FTC officials defending healthcare system mergers and acquisitions and instead blaming commercial healthcare plans. for expensive medical expenses.


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