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House Questions Grow for Insurer CEOS on Mergers

By Jad Chamseddine, CQ Roll Call

September 30, 2015 -- Republicans are joining the opposition to mergers among the largest U.S. health care insurers by questioning if the deals will provide benefits and synergies that will reach consumers.

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law was largely unified in questioning Anthem Inc. CEO Joseph Swedish, whose company plans to buy Cigna Corp., and Aetna Inc. CEO Mark Bertolini, whose company wants to purchase Humana Inc., on Tuesday over advantages the executives say the mergers would bring to consumers. This was the House panel's second hearing on health care marketplace competition and the second time the CEOs appeared in Congress to defend their deals, following their testimony last week before a Senate panel.

While some Republicans used the stage to say the health care law known as Obamacare accelerates industry consolidation, an argument they made in the previous House subcommittee hearing, Georgia Republican Doug Collins complained that Aetna's acquisition of Humana would give the combined company control of 65 percent of Georgia's health insurance market.

"Tell me why I shouldn't be concerned about this level of concentration?" Collins asked.

Bertolini said Aetna and Humana could divest some of their business in some markets, including Georgia, to reduce the combined company's power in the state.
"Concentration is one measure of whether or not there is a problem from a competitive standpoint," Bertolini said. "We will cooperate with the Department of Justice in reviewing that opportunity and those issues."

While Bertolini said 10 competitors exist in Georgia, Collins pressed the CEO on a potential lack of choice for his constituents. "These choices seem to be narrowing more and more, and when you get to a market share of close to 65 percent that does tend to look like you're cutting off avenues."

John Ratcliffe, R-Texas, took time in the hearing to criticize Obamacare, calling it the "perversely named" Affordable Care Act, but showed concern as he asked whether previous mergers between health care insurers failed to add benefits to consumers. House Judiciary Subcommittee Chairman Tom Marino, R-Pa., had similar concerns as Ratcliffe, questioning how his rural constituents would get any benefits from multi-billion dollar deals.

He also criticized the health care law, saying, "I continually hear from my constituents, physicians, and hospitals that Obamacare is just driving the price up astronomically to the point that some of the hospitals and physicians believe they can't stay in business."

Democrats, who often urge government intervention when consolidations could hurt consumers, also expressed skepticism. Rhode Island Democrat Rep. David Cicilline, D-R.I., challenged the argument that the consolidations would lead to improved quality at reduced cost.

"This claim arises from the idea that the merged insurers will realize savings from increased efficiencies and will pass these savings on to consumers," Cicilline said. "However, I must admit after reviewing the testimonies, I'm skeptical."

New York Democrat Hakeem Jeffries urged the Justice Department to look at whether the public will benefit from these mergers, as opposed to just looking at anti-competitive effects.

"These are publicly traded companies, which means they have fiduciary obligations to their shareholders and I think the notion that the mode of analysis should simply be whether it's likely to result in a detriment to the public is a misplaced way to approach public policy," he said.

Jefferies said research has shown that merger benefits do not go to consumers. Jaime S. King, a law professor at University of California, Hastings College of the Law, agreed with Jefferies, citing a recent study showing that profits increased for the insurance companies without no reciprocal benefit to consumers.

The CEOs stuck to the same points they made during Senate subcommittee hearings a week ago, arguing the deal would allow consumers more affordability and better care. Swedish pointed to a flurry of new entrants to the market, saying the health care market was "flush" with competition and that the number of health insurers has increased 26 percent.

But Collins questioned whether that will really help consumers. "When elephants fight, the only thing that loses is the grass, and the grass is the people you serve," Collins told Bertolini and Swedish.

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