Newspaper article St Louis Post-Dispatch (MO)

Block the Aetna Humana Merger

Newspaper article St Louis Post-Dispatch (MO)

Block the Aetna Humana Merger

Article excerpt

Last week, the Missouri Department of Insurance held a hearing on the proposed merger of Aetna and Humana. The hearing was not widely noticed, but it could not be more timely or important the proposed merger threatens to raise premiums of more than 300,000 older Missourians who depend on Medicare Advantage. History demonstrates a simple and compelling truth: When insurers merge, premiums go up.

Faced with this daunting truth, the merging companies presented the best economists money can buy to muddy the issue and bring confusion to simplicity. But as John Adams once said, "Facts are stubborn things," and the simple facts are that the Aetna-Humana merger will eliminate competition and increase consumer costs.

The evidence is overwhelming: Health insurance mergers lead to higher premiums and costs. After the Aetna Prudential merger in 1999 premiums went up 7-12 percent. A study of a major merger in Nevada found similar results. No study not a single one has found that consumers benefit from health insurance mergers.

Competition matters a lot in health insurance, especially in the Medicare Advantage markets. A comprehensive study by the Commonwealth Fund last year found that there was a clear relationship between the level of concentration how many choices consumers had and premiums. A similar report by the Center for American Progress looking specifically at competition between Aetna and Humana found that premiums are lower in markets where the two companies compete.

The MA market in Missouri is already highly concentrated with Aetna, Humana and UnitedHealth accounting for approximately 83 percent statewide. The combination of Aetna and Humana would make it the king of the castle with over a 90 percent market share in eight counties, 80 percent in 19 counties, and 70 percent in 11 counties.

Today, competition between the two insurers lowers Aetna's annual premiums by up to $302 and Humana's annual premiums by $43. This merger would eliminate that competition and drive up consumer costs. …

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