Here's Why This Loss for Two Health Insurance Giants is a Win For You
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Two giant health insurance providers are canceling a $34 billion deal, and it's probably a good thing for consumers.
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Aetna and Humana announced Tuesday that the two would no longer pursue a merger after a federal judge blocked the deal in January because of a U.S. Department of Justice (DOJ) anti-trust case, according to CNN Money. However, the health care giant argued Tuesday that its merger with Humana would've been good for customers and given them lower cost options for health coverage.
“While we continue to believe that a combined company would create greater value for health care consumers through improved affordability and quality, the current environment makes it too challenging to continue pursuing the transaction,” Mark T. Bertolini, Aetna Chairman and CEO, said Tuesday in a press release.
Opponents say that mergers like these will ultimately just hurt low-income and middle class customers.
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"The more competition in these marketplaces, the better, because then [consumers] have more choices to choose from different plans," Vijay Das of consumer rights advocacy group Public Citizen told the Hartford Courant. "But if there is more consolidation, the market power shifts to the insurance companies, where they have a 'take it or leave it' attitude because they are the only player in town."
U.S. District Judge John Bates said that Aetna lied about why it pulled out of Affordable Care Act exchanges in 11 states, noting that Aetna said it pulled out of the exchanges because it was too expensive. However, the federal judge stated that the company wanted to "improve its litigation position," by threatening to dump out of the exchange unless it received desired results from regulators.
The Federal Trade Commission says that anti-trust laws are designed to "protect the process of competition for the benefit of consumers, making sure there are strong incentives for businesses to operate efficiently, keep prices down, and keep quality up."
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"Sometimes the right way to protect consumers is to simply say no to an anti-competitive deal," wrote David Balto, an anti-trust lawyer who previously served in the DOJ's anti-trust division, in an opinion piece for The Hill.
An analysis from the Center for American Progress, a progressive advocacy organization, found that Medicare users pay less when Aetna and Humana compete directly. "The competition between the two insurers lowers Aetna’s annual premiums by up to $302 and Humana’s annual premiums by $43," wrote the center in January 2016. "In the absence of this competition, premiums would be higher by these amounts."
A federal judge also blocked another potential merger between Anthem and Cigna, last week based on anti-trust laws, and Cigna is ending the merger, according to Reuters. These four companies are the top five biggest health insurance companies in the U.S., according to Forbes.
