Potential Mergers in the Health Insurance Sector Stir Worries in Providers

[CAL/AAEM News Service]

[cid:image001.gif at 01C9BD29.4B4C7320]<http://www.calaaem.org/>
April 8, 2009
Potential Mergers in the Health Insurance Sector Stir Worries in Providers
The California Healthline<http://www.californiahealthline.org/Articles/2009/4/8/Potential-Mergers-in-the-Health-Insurance-Sector-Stir-Worries-in-Providers.aspx>

Some doctors and hospitals are expressing concern about the effect of potential mergers in the health insurance industry on payment rates, the Chicago Tribune<http://www.chicagotribune.com/business/chi-tc-biz-wed-insurance-clout-apr08,0,5750281.story> reports.

According to the Tribune, rumors are circulating that major health insurers are considering mergers, including the possible acquisitions of Humana by Aetna and Coventry Health Care by UnitedHealth Group.

Humana, Aetna and UnitedHealth would not confirm that discussions of a merger have taken place, and Coventry could not be reached for comment, according to the Tribune.

According to the Tribune, the economic recession has caused many health insurers to lose business as more employers and consumers drop coverage, thus providing the companies with a reason to merge.

Historically, insurers have said that consolidating helps them become more efficient. With larger patient pools, insurers say they can negotiate lower payments with medical providers, which could result in lower premiums for consumers.

Todd Swim, a partner with Mercer, said, "Another issue that is plaguing the market now is the potential Obama health reform plan and ramifications on those companies in the Medicare business."

 The Obama administration is considering cutting or eliminating the Medicare Advantage plan, through which the government contracts with private insurers to manage care for Medicare beneficiaries.
The Obama administration's proposal to encourage increased competition among health plans has led some to believe that the Department of Justice's Antitrust Division will closely scrutinize any proposed insurance firm merger, the Tribune reports (Japsen, Chicago Tribune, 4/8).
Abid Mogannam &
Brian Potts MD, MBA
Managing Editors, CAL/AAEM News Service
University of California, Irvine
Contact us at: somcaaem at uci.edu<mailto:somcaaem at uci.edu>

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