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Insurer mergers would squash competition, AMA says

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If the pending mergers between Anthem Inc. and Cigna Corp. and Aetna Inc. and Humana Inc. are approved by the federal government, major insurance markets in almost half the country would suffer from reduced competition and potentially higher prices, according to a new analysis released by the American Medical Association.

The latest shot from the national doctors lobbying group comes a week after the American Hospital Association blasted the insurance mergers with its own letters.

The AMA said both mergers combined would exceed federal antitrust guidelines in 97 metropolitan markets in 17 states. "Significant competitive concerns" would exist in 154 metro areas in 23 states, according to the AMA.

The AMA looked at commercial health insurance data from 2013 to reach its findings.

The tie-ups would result in higher prices for consumers, lower payments for physicians and hospitals and reduce innovation in the delivery of care, the group said.

Insurance companies seeking the mergers have made the opposite claim. They say the tie-ups will reduce premiums by lowering overall overhead costs for insurance companies and giving insurers bargaining power against large hospital systems, whose own merger wave has concentrated the delivery of care in numerous markets.

The AMA's study is part of its annual review of insurance market competition. It found insufficient competition in seven out of 10 metro areas studied, with at least 40% of markets having a single insurer with over 50% of the commercial insurance market.

The 10 states with the least competitive markets were Alabama, Hawaii, Delaware, Michigan, Alaska, South Carolina, Louisiana, Nebraska, Illinois and North Dakota.

The American Hospital Association has also objected to the planned insurance mergers. It said the deals threaten “serious and widespread competitive harm” by reducing competition in the sale of Medicare Advantage plans, the AHA said in a letter to the Justice Department last week, according to the New York Times.

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.