Many observers believe the consolidation is being driven by the demands of the Affordable Care Act.
The Department of Justice will extend its anti-trust review of Aetna’s proposed merger with Humana for another 30 days. The Hartford based health insurer just announced it's re-filing its notification with the department to allow for the month-long extension.
Connecticut Senator Richard Blumenthal is urging the DOJ to consider the Aetna-Humana deal alongside an even bigger merger, that of Bloomfield-based Cigna and Anthem. He told WNPR's Where We Livethat the two, taken together, will have a huge effect on the industry landscape.
"The simple fact of the matter is that they overlap in a lot of their product lines," said Blumenthal. "And when there are fewer companies selling a particular product, it can mean more power, less competition, less choice, and that’s generally not good for consumers. And we’re not talking only about individual consumers like you and I. We’re talking about employers, businesses that in turn can see higher costs. That’s not good for the economy."
Many observers believe the current consolidation of both health care providers and health insurance companies is being driven by the demands of the Affordable Care Act. Studies of previous mergers within the insurance industry show they tend to lead to higher premium prices. But Keith Stover of the Connecticut Association of Health Plans said the ACA may also protect consumers this time, because it mandates that a higher amount of premiums must be spent on medical care, and not on creating profit for the company.
"There was not a cap on the margins of insurers, which is what happens now — there’s a cap on medical loss ratios, which I would argue, part of the rationale for that is to use the insurers as a tool to drive down provider and pharmacy costs," said Stover.
Connecticut is waiting to hear what the effect may be on insurance industry employment in the Nutmeg state as two of its biggest employers undergo major mergers. Joe Brennan of the Connecticut Business and Industry Association told Where We Live, the Aetna-Humana deal may be different from Cigna-Anthem. "We have to look at the markets that these companies are in," he said. "Largely Humana and Aetna are in different markets. Humana largely in Medicare, Aetna more in commercial markets, so we’re hopeful that if this merger does go through, that we’ll see substantial job retention here in Connecticut and hopefully job creation."
If they pass the scrutiny of regulators, both deals are projected to close next year.