The Texas Medical Association has now enlisted the help of the U.S. Department of Justice to look into a merger of health insurance companies Aetna and Humana. They say that the companies forming one giant alliance will be damaging to patients and their doctors due to reduced competition in an already narrow industry.
“We feel like this is of paramount importance in Texas,” said Dr. Joseph Valenti, a Denton obstetrician-gynecologist and chairman of the council of socioeconomics for the Texas Medical Association. They are one of the strongest medical associations in the country with roughly 80% membership of doctors in the state.
Valenti wrote a letter to William Baer, U.S. assistant attorney general in the Justice Department’s antitrust division, on Oct. 6, stating that Texas has mostly small, one- to three-doctor practices.
The group says that this merger would likely make it incredibly difficult to stay open, and they will have little or no power to bargain against an already shrinking number of insurance companies for rates. In addition, 50% of urgent care centers in the country are run by small groups of physicians and could be impacted as well.
“As plans grow large enough, those plans gain coercive pricing power over physicians, so that contract terms are defined unilaterally by the plans and no real negotiation is possible,” Valenti wrote.
There is also “less incentive to be competitive” in a market with so few insurers to choose from. Without reimbursement, smaller practices will likely not be able to stay open for very long. This will hurt access to care for numerous patients throughout the state.
The merger, a $37 billion acquisition of Humana by Aetna, is just the latest in healthcare industry consolidation nationwide. In the summer of 2014, Anthem bought Cigna, thus forming the largest insurer in America. If this merger goes through, Aetna-Humana will become the third largest player in the Medicare market.
Stockholders of the companies overwhelmingly supported the merger last month. A decision was supposed to be made and go into effect during the second half of next year, but the letter to the Justice Department has delayed that decision, while they finish seeking more information.
TMA has not asked the Justice Department to block the entire merger but rather look at the deal to ensure that is was fair and did not fit an antitrust law, Valenti said.
Aetna and Humana issued separate email statements saying that despite what many believe, the merger would benefit consumers.
“The primary goal of the Aetna-Humana transaction is to enable our companies to offer consumers a broader choice of products, access to higher quality and more affordable care, and a better overall experiences,” the Humana statement said.
Aetna agreed, adding that the merger “is about creating positive change in the health care marketplace.”
Aetna also wrote that it “views physicians as an important customer that we must serve – that we must collaborate and work together with the same objectives, same measures, and attractive reward systems for success.”
“Further,” Aetna wrote, “there are a half million Texans who are newly insured through the federal exchange making us confident that patient demand for physician services will remain healthy for the foreseeable future.”