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You are here: Home / Anderson On Health Insurance / Another anti-trust win

Another anti-trust win

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Via the Washington Post there was another anti-trust win last night. The Anthem-Cigna merger was denied. Anthem wants to appeal the decision but Cigna might want to walk away.

“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects: it will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market,” U.S. District Judge Amy Berman Jackson wrote in a 12-page order.

So we’ll still have a national Employer Sponsored Insurance (ESI) market of five national players and a bunch of local and regional players. The Medicare Advantage and Medicaid managed care market won’t change much either. What are the policy implications?

I think that is a really good question raised by one of the nation’s top anti-trust economists. What would get approved? I think and this is pure speculation, that small buying small would get approved and big buying specialization would get approved. I also think that big buying technology that happens to have some covered lives attached to it would also get approved.

The next area of play will be the regional players. Will a Blue Cross and Blue Shield affiliate buy out another cross-state BCBS affiliate across the state like Highmark did to BCBS of Northeastern Pennsylvania? Would a regional academic medical center look to acquire another insurer in a brand new market as that could be cheaper than building up both a network and brand equity in a new city? Would a Medicare Advantage carrier be allowed to buy a Medicaid Managed Care Company?

I think those types of mergers would be allowed as they have been allowed. Moderately large full service carriers have been allowed in the recent past as Kaiser bought out Group Health in Washington. But right now the law and the precedent should severely restrict the purchasing capability of the national five.

The next major question will be if the aggressive anti-trust push is extended to more wins in the hospital space and if it continues under this administration. I don’t know.

Reader Interactions

11Comments

  2. 2.

    efgoldman

    The next major question will be if the aggressive anti-trust push is extended to more wins in the hospital space and if it continues under this administration

    Hahahahahah
    Richard/David, you don’t believe for a minute that Tangerine Tumor and his merry band will care.
    I fact, if Anthem/Cigna try again, it will whiz thru in a heartbeat,
    I have no expertise or insight into the insurance market. But I read the papers, and I see the cabinet…..

  5. 5.

    Chris

    Praise God for antitrust regulations, the guardians of the free market.

    (Though funnily enough I suspect our 1%er betters would take issue with them).

  6. 6.

    efgoldman

    @Tripod:

    Already seeing arms length investments into the provider space.

    Well, that’s peachy fucking keen. Health care on the cable/ISP model;.

  8. 8.

    randy khan

    The last gasp of the Obama Antitrust Division turns out to be pretty good.

    I assume that things will be different under the new Administration, at least once it gets around to nominating someone for the job.

  10. 10.

    dr. bloor

    @Patricia Kayden:

    Good news. Mergers can equal higher prices so this is great for consumers.

    This isn’t a given at all in this situation. As David, er Richard, er Whathisname has pointed out in the past, the insurance company mergers increase leverage in negotiations with equally-as-merger-prone hospital systems. Premiums are a product of how much the insurance company wants to make and how much the insurance company has to pay docs/hospitals/etc for health care.

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