The final word: Advocating for policies to create a stable insurance market

Thursday, September 01, 2016 12:46 PM
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Adela Flores-Brennan, Executive Director, Colorado Consumer Health Initiative

When the Department of Justice (DOJ) antitrust division recently moved to block both major health insurance mergers between Anthem and Cigna, and Aetna and Humana, the Colorado Consumer Health Initiative (CCHI) applauded the action as being protective of consumer interests. CCHI is a consumer-oriented, membership-based health care advocacy organization whose mission is to advance the consumer perspective to create equitable access to quality, affordable health care for all Coloradans. CCHI has been working to ensure Coloradans’ affordable access to health coverage under the framework of the Affordable Care Act (ACA) since its passage in 2010. We believe that the opportunities under the ACA, which have helped reduce the uninsured rate by half in Colorado, are extremely positive improvements.

However, recent trends in the insurance market remind us that in order to ensure Colorado consumers can get the health care they need when they need it, we must be diligent about advocating for policies that create a stable insurance market that provides affordable coverage and supports access to quality health care. Thus, when considering the proposals to consolidate the five largest insurance companies into three mega-insurers, CCHI was concerned about the impact on market stability and how that would affect consumer choice, access and affordability.

The combined impact of the mergers was estimated to increase market concentration in Colorado as much as 42 percent. We are concerned that the increased concentration would lead to decreased competition and thus less choice and higher prices for consumers. The insurance companies have suggested that the mergers would translate into lower costs for consumers because the carriers can use their increased leverage to negotiate more favorable provider rates. However, there is no guarantee that the insurance companies’ savings would translate to savings to consumers, and research has shown that previous mergers have failed to produce lower rates for consumers.

Similarly, mega-insurer dominance may not directly correlate with expanded access or increased innovation toward improved quality. Rather, as insurers currently look to cut costs through narrower networks, those same strategies could be just as likely post-merger. And decreased competition decreases incentives to improve quality. However, with less competition in the market, and fewer plans to choose, consumers would also have less recourse to vote with their feet and switch plans.

It also seems unlikely that mergers would be a stabilizing force in the insurance market. With or without the mergers, disruptions in the insurance markets will likely continue for the foreseeable future. For example, prior to the DOJ’s action, Humana and United both exited the Colorado individual markets (both on and off the exchange). Colorado’s Rocky Mountain Health Plans pulled back all of its individual market products except for its Monument Health products in Mesa County, and UnitedHealth recently announced its intent to acquire Rocky Mountain Health Plans as a wholly owned subsidiary. And, insurance premiums continue to increase. 

To borrow language from a recent L.A. Times editorial, the market disruptions can either be considered a “death rattle of a failing” market or the growing pains of an emerging one. We optimistically prefer the growing pains analogy. Either way, there is no shortage of justification for regulators at the state and federal level to carefully scrutinize the proposed insurance company mergers.

If the DOJ is unsuccessful in blocking the mergers, CCHI will advocate to ensure that state regulators scrutinize the transactions for the impact on consumers and enforce certain conditions aimed at consumer protection. (This may only be possible in the Anthem-Cigna merger, as the Colorado Division of Insurance has already given the green light to the Aetna-Humana merger.) Conditions could include requirements for the companies to expand into or remain in certain markets, limits on premiums and cost sharing, and increased charitable giving.

At the end of the day, the need to ensure a stable insurance market for Colorado consumers is much more complex than the issue of “mergers versus no mergers.” It will require a great deal more policy development at the state and federal level that accounts for and addresses all parts of the health care ecosystem (payers, providers, purchasers and patients). CCHI looks forward to actively participating in those policy conversations to ensure consumer interests are being protected.



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