Health insurance mergers drawing more scrutiny from states

Over the last few years, several of the nation's major health insurance providers have decided to merge for a number of reasons. However, these moves are now being closely scrutinized by both federal and state governments, and could have a major impact on the industry as a whole.

The U.S. Department of Justice has already started a probe of two of the larger mergers in the history of the health insurance industry, and has now been joined by the attorneys general from 15 states, according to a report from Reuters. While some of those newly participating states were not named because the investigation is not yet public, some – including Connecticut, Florida, Iowa, Massachusetts, and Tennessee – are certainly in that group.

Some major health insurers may soon face significant scrutiny.

What's the goal here?
The Justice Department and states aim to determine whether these mergers – which could significantly reduce the number of insurance options available to consumers in many states nationwide – would actually violate anti-trust laws, the report said. Indeed, it has long been expected that these proposed marriages of four major health insurers into just two companies would be both criticized and scrutinized by many within the state and federal government.

Even presidential candidate Hillary Clinton has expressed misgivings about what this might do to consumers' health insurance costs, the report said. Likewise, the American Medical Association has voiced similar concerns. Indeed, data shows that about 2 in 5 people in metropolitan areas nationwide already live in a place where just one health insurer makes up at least 50 percent of the market there, and that number would likely increase significantly if these mergers were allowed to go through.

The states will, effectively, be doing the legwork for the Justice Department here, rounding up lots of data about how the proposed changes would impact consumers within their individual borders, the report said. The Justice Department would then weigh that data and consider whether to file anti-trust suits to prevent the mergers from happening.

What's the objection?
Some experts have compared these mergers to the proposed Comcast purchase of Time Warner Cable last year, the report said. That deal was so heavily scrutinized at the time, attracting investigations from more than 20 state attorneys general that Comcast simply gave up on it.

However, at least one of the companies in question here seems to welcome the scrutiny, the report said. It says that it supports the effort because a lot of the data that could be dug up by the state investigations may help the new entities to better understand the evolving markets they would face there, and potentially better serve their customers going forward.

This is certainly something that will have a major effect on the health insurance industry one way or another in the coming months and beyond, so it will attract – and require – a lot of attention as more developments come out. Therefore, the more health insurers can do to make sure they're keeping tabs on this whole situation, the better off they're likely to be.