Money (photo illustration)—Getty Images/iStockphoto (2)
By Kara Brandeisky
September 10, 2015

When it comes to health insurance, most consumers don’t have a lot of companies to choose from — but the pickings could get even slimmer if two big deals proposed this July actually go through.

The potential combinations — one between Anthem and Cigna, and another pairing Aetna with Humana — would bring the number of major national health insurers from five down to three.

Now the American Medical Association is raising concerns that these acquisitions will reduce competition in the health insurance market — meaning that you could end up paying much higher premiums. The thinking is that when employers and individuals have fewer options, insurers can raise prices, and consumers can’t do much about it.

The companies are contending that the insurers have “complementary” services. “The geographic overlap is not as redundant as people might think,” says Cigna CEO David Cordani.

Bad Precedents

The AMA says, however, that there’s precedent for their worries: Researchers have found that premiums increased after Aetna and Prudential merged in 1999 and after UnitedHealth and Sierra Health Services merged in 2008. On the flip side, researchers have also found that when there are more insurers, consumers pay lower premiums.

“A lack of competition in health insurer markets is not in the best interests of patients or physicians,” AMA President Steven J. Stack said in a statement. “If a health insurer merger is likely to erode competition, employers and patients may be charged higher than competitive premiums, and physicians may be pressured to accept unfair terms that undermine their role as patient advocates and their ability to provide high-quality care.”

Using data from the its study of health insurance market concentration across the country, the AMA argues that the potential Anthem-Cigna linkup could harm consumers in 85 metropolitan areas in 13 states: California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, and Virginia.

The AMA says the merger could also “raise significant competitive concerns” in other metropolitan areas, 111 cities in all.

Meanwhile, the AMA expects the Aetna-Humana merger could harm consumers in 15 metropolitan areas in seven states — Florida, Georgia, Illinois, Kentucky, Ohio, Texas, and Utah — and limit competition in up to 58 metropolitan areas. (Both deals still need approval from the U.S. Department of Justice, the Federal Trade Commission, and state regulators before they proceed.)

Hot Spots

Among the cities where the AMA expects that mergers would enhance insurer’s market power, here are the metro areas that could see the biggest changes in market concentration:

Anthem-Cigna merger
1. Dalton, Ga.
2. Indianapolis
3. Lafayette, Ind.
4. Richmond, Va.
5. Terre Haute, Ind.
6. Rochester-Dover, N.H.
7. Bangor, Maine
8. Manchester, N.H.
9. Kokomo, Ind.
10. Lewiston-Auburn, Maine

Aetna-Humana merger
1. Macon, Ga.
2. Springfield, Ohio
3. Louisville, Ky.
4. Elizabethtown, Ky.
5. El Paso, Texas
6. San Antonio,Texas
7. Jacksonville, Fla.
8. St. George, Utah
9. Lexington-Fayette, Ky.
10. Rockford, Ill.

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