Center for Public Integrity, August 24, 2015
Commentary by Wendell Potter
If regulators approve the recently announced mega-deals in which Aetna, Inc. would buy Humana Inc. and Anthem Inc. would buy Cigna Corp., will consumers benefit? Or will the winners be limited primarily to the executives and shareholders of the companies involved?
If history is guide, the big winners will be — you guessed it — company executives and shareholders. The companies’ customers, on the other hand, likely will have the privilege of paying more, not less, for their coverage.
A new study on the effect of health insurance market consolidation and dominance published earlier this month should be required reading by the folks at the Justice Department, who will decide whether the deals should go forward. The study’s conclusion: Insurers that bulk up to the point that they can dominate a given market raise rates considerably more than their smaller competitors.
The findings in the study, published in a Harvard-affiliated peer-reviewed journal, are consistent with previous research that has found that consumers usually come out on the short end of the stick when insurers merge. It’s an entirely different outcome, though, for the few executives who make the mergers happen.