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Federal government blocks health insurance mergers

Health Care and Health Insurance
by Dave Palmer
States take their own paths for dealing with health insurance changes
States take their own paths for dealing with health insurance changes

Over the past few years, a lot of attention has been paid to the machinations in the health insurance industry as they related to a number of the industry's biggest participants joining forces. However, it now seems as though all that work was for naught, because the U.S. government has decided that such moves would be detrimental to consumers.

The U.S. Department of Justice recently moved to block two proposed health insurance mergers, arguing that if four of the five biggest health insurers moved to become two of the three biggest, that would be anti-competitive and therefore harmful to those who buy such coverage, according to a report from NBC News. The four companies in question are worth a total of $91 billion, but say they have struggled to keep profits high since the implementation of the Patient Protection and Affordable Care Act's coverage mandate.

"These mergers would reshape the industry, eliminating two innovative competitors ... at a time when the industry is experimenting with new ways to lower health care costs," the government said in its court filings, according to the news organization.

Concerns over the cost of coverage are one reason the DOJ wants to block major health insurance mergers.Concerns over the cost of coverage are one reason the DOJ wants to block major health insurance mergers.

More details of the situation
Experts say that while these deals would have likely resulted in more profits for health insurers themselves, that would come on the back of higher prices for average consumers, the report said. As such, it's likely that such deals would technically violate antitrust laws, even as the nation's largest insurer would have been out of the two proposed deals.

One group in particular that might have been negatively impacted by the moves would have been senior citizens, because one of the two proposed mergers would have left them with only one major private Medicare alternative in the U.S., the report said. It's also worth noting that it's possible the health insurers will fight the DOJ's case, but at least one now says it is evaluating other options as well.

Consumers already concerned about rising prices
Meanwhile, all this happens at a time when consumers are now starting to face the first real results of the ACA's coverage mandate going into effect, resulting in higher coverage costs going forward, according to the Des Moines Register. Iowa, like many other states, has seen health insurers file rate changes for next year that would significantly increase the cost of coverage for average consumers. One insurer with some 1 million customers across the Hawkeye State said that, for 30,000 of them, their rates could rise as much as 43 percent in 2017. Others will face double-digit increases as well, though not quite so significant.

This may, obviously, cause some consternation and concern among enrollees, and as such those in the health insurance industry will probably need to do more to explain why these costs are rising, and what that ultimately means for consumers. Many may not fully understand the ins and outs of their coverage, and the more that can be done from within the sector to help them gain that understanding, the better off all involved are likely to be.

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