Group Seeks U.S. Antitrust Probe Of Health Care Mergers

NU Online News Service, May 21, 9:58 a.m. EDT

WASHINGTON–A health care consumer group is asking the Department of Justice to initiate an antitrust probe of health care insurers based on a study indicating huge consolidation in the industry over the past 13 years.

Health Care for America Now (HCAN), the group that conducted the study and is seeking the antitrust investigation, is pushing for a public health care coverage option as part of health care reform.

The report contends that "extreme" health insurance industry consolidation has resulted in a market failure where a small number of large companies use their concentrated power to control premium levels, benefit packages, and provider payments in the markets they dominate.

It also states that the health insurance industry "invests more in buying back its own stock and rewarding its shareholders than in improving system operations, reducing premiums, or in developing ways to pay doctors and hospitals fairly."

The report is titled, "Premiums Soaring in Consolidated Health Insurance Market."

As a result, mergers "health insurance premiums have skyrocketed, going up more than 87 percent–on average–over the past six years," the report said.

But Susan Pisano, director of communications for America's Health Insurance Plans, argues otherwise.

She said antitrust investigators "for decades" have probed the health care industry and have found a number of players in each market, and any number of health care insurance options from which consumers can choose.

Moreover, she said, the purpose of antitrust watchdogs is "not to advance the political agenda of any group."

David Balto, former policy director of the Federal Trade Commission and now a senior fellow at the Center for American Progress, cosigned a letter signed by HCAN to the Department of Justice Antitrust Division asking for a comprehensive investigation into the health insurance marketplace.

"The HCAN report provides a much needed spotlight on health insurance markets, and what it found is a toxic marketplace where competition and consumers suffer," Mr. Balto said.

He charged that antitrust enforcers "have been asleep at the switch for the past several years and have permitted health insurers to acquire monopolies in dozens of markets."

"Consumers have paid a steep price for this merger mania in higher prices, deceptive and fraudulent practices, and ultimately assembly line health care," he said.

Mr. Balto added, "To try to reform health care in the current market structure is like setting sail across the Atlantic on a raft."

But, in calling for the probe, Mr. Balto said while renewed antitrust and consumer protection enforcement is essential, "it is not sufficient to begin to restore some semblance of a functioning market."

"Only a public health insurance option will be able to force private insurance companies to adopt new pro-consumer policies," he said.

Amongst the report's findings is that over the past 13 years, more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets but haven't delivered on promises of increased efficiency.

Citing American Medical Association data, the report finds that 94 percent of insurance markets in the United States are now highly concentrated, and insurers are thriving in the anti-competitive marketplace, "raking in enormous profits and paying out huge CEO salaries."

Profits at 10 of the country's largest publicly traded health insurance companies rose 428 percent from 2000 to 2007, the report said.

In 2007 alone, "the chief executive officers at these companies collected combined total compensation of $118.6 million–an average of $11.9 million each. That is 468 times more than the $25,434 an average American worker made that year," said the report.