May 25, 2016

Lawmakers Press For Thorough Review Of Two Health Insurance Mergers

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Seventeen lawmakers are asking the state’s insurance commissioner for a fair and thorough review of two pending colossal health insurance mergers and a study on how they could affect Connecticut jobs.

“The proposed AnthemCigna and AetnaHumana mergers are likely to have a negative impact on both the cost and quality of care in Connecticut, permanently changing our state’s health care system for patients, physicians, and other stakeholders,” according to the lawmakers’ letter sent to Insurance Commissioner Katharine L. Wade.

In a conference call Wednesday, legislators led by state Rep. Gregory Haddad, D-Mansfield, said, that the “mega-mergers” could drive up consumer costs, concentrating more than 64 percent of the Connecticut health insurance market in their hands and restricting provider networks.

Legislators, in the letter, asked Wade to hold multiple public hearings across the state, grant consumer advocates intervenor status in the proceedings and commission a study of the impact the mergers would have on consumers in terms of health care cost and quality.  Also, they want a review of how the mergers would impact Connecticut jobs.

Haddad said there could be increases in deductibles, premiums and out-of-pocket costs and restrictions to provider choice as a result of the mergers.

“It’s important for us to understand what that concentration of power will mean to the market itself,” he said.

Tom Swan, executive director of the Connecticut Citizen Action Group, added that jobs need to be protected, particularly in light of Aetna’s announcement last week that they are not committed to staying in Connecticut.

“We call upon Commissioner Wade and the department to ensure that Connecticut jobs are protected as part of the review process,” Swan said.

In response to the letter, Donna M. Tommelleo, insurance department spokeswoman, provided an outline of the review for Anthem-Cigna, which includes looking at financials, corporate structure changes, and whether “the merger substantially lessens insurance competition in Connecticut.” The commissioner did not comment directly.

Haddad and the Connecticut Campaign for Consumer Choice, a group of organizations and individuals working to educate consumers and families on the pending mergers, shared a poll that showed the public has deep concerns about the merger and public process involved in its possible approval.

The poll addressed both mergers, and found 89 percent of registered voters surveyed by phone or online were “very” or “somewhat” concerned. And 73 percent of those surveyed had not been aware of the mergers, Public Policy Polling reported.

The polling firm conducted 834 interviews from May 16 to 17, 2016 on behalf of Connecticut Campaign for Consumer Choice. The margin of error for the data was +/- 3.4 percent.

“We’re really concerned to hear that only 27 percent of the people in Connecticut are even aware of these mergers,” said Jill Zorn, senior policy officer, at the Universal Health Care Foundation, “and we really believe the public needs to know the potential consequences of these mergers.”

The Campaign is comprised of the Universal foundation, the citizen action group and the Connecticut State Medical Society.

Combined, the two mergers have the potential to affect millions of Connecticut customers and others nationwide.

The $54 billion Anthem-Cigna proposal could affect more than a million private insurance customers, according to the 2015 Consumer Report Card on Health Insurance Carriers in Connecticut. Combined, Anthem Blue Cross and Blue Shield and Cigna covered 1.59 million insured people in Connecticut in 2014, or 64 percent. Anthem covered about 44 percent of the market to Cigna’s 20 percent, the report said.

In Aetna’s $37 billion proposed merger, Aetna covered 457,619 people in Connecticut in 2014, or 18.5 percent of the commercial market, the report states. Humana does not participate in the Connecticut market.

The insurers maintain that cost savings, increased efficiencies and innovation will result from the mergers.

Various state insurance regulators and the U.S. Department of Justice are responsible for deciding the mergers.

The DOJ’s anti-trust division and Connecticut’s attorney general are responsible for deciding whether the mergers would unfairly monopolize the industry.

Connecticut’s Insurance Department is taking the lead on a 26-state review of the Anthem-Cigna merger. A public hearing date has not yet been set.

Humana, which Aetna is poised to acquire, does not have licensed operations in Connecticut, so a public hearing for that merger is not required. Connecticut filed no objections in that review, while Florida and Wisconsin, where Humana is the state’s largest licensee, have approved the deal, according to news reports and spokespersons for the Connecticut Insurance Department and the Wisconsin Office of the Commissioner of Insurance.

The DOJ and Connecticut attorney general have yet to weigh in on either merger.

Anthem said that its acquisition of Cigna “would not lessen competition in Connecticut in any meaningful way,” but produce “substantial benefits,” according to its application filed in Connecticut.

Competition in the Connecticut market will remain stiff after the merger as smaller insurers like ConnectiCare continue to compete aggressively with Anthem on pricing for health plans, the application states.

Anthem and Aetna, in separate statements, said that the mergers would promote pursuit of value-based healthcare. The value-based model for reimbursement for service rewards hospitals and physicians for obtaining healthier patient outcomes at lower cost.

Aetna said its merger will result in “significant reductions in operating expenses [that] will flow back to consumers through affordable coverage for medical services and pharmaceuticals, and lower out-of-pocket costs,” according to an e-mail from spokesman T.J. Crawford, Aetna spokesman.

 

 

 

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