September 11, 2015 Practice Points

Mergers Should Be Presumed Likely To Enhance Market Power, AMA Says

The AMA concluded that the proposed mergers between Anthem and Cigna as well as Aetna and Humana would impermissibly enhance the combined entities’ market power for purposes of federal antitrust review.

By Andrew A. Kasper

The proposed mergers between health insurers Anthem and Cigna as well as Aetna and Humana should be presumed likely to impermissibly enhance the combined entities’ market power for purposes of federal antitrust review, the American Medical Association (AMA) concluded in studies released September 8.

Using 2013 data regarding commercial enrollment in fully and self-insured health-insurance plans, the AMA’s Health Policy Group evaluated how the mergers should be scrutinized under the 2010 Department of Justice/Federal Trade Commission Horizontal Merger Guidelines. The Horizontal Merger Guidelines provide that mergers between entities competing in highly concentrated markets should be presumed likely to enhance market power if the merger would increase an econometric measure of market concentration by a certain numerical threshold.

Anthem’s proposed merger with Cigna, announced July 24, 2015, would exceed that threshold—and thus should be presumed to enhance the combined entities’ market power—in 85 metropolitan areas in 13 states, the AMA’s study found. The proposed merger poses a risk of significantly diminishing competition in an additional 26 metropolitan areas, the group reported.

The Aetna-Humana tie-up, which the firms announced on July 3, 2015, should be presumed likely to enhance market power in 15 metropolitan markets in 7 states, the AMA concluded. The proposed merger would create significant competitive concerns in an additional 58 metropolitan markets in 14 states, the study found.

Based on the results of the two analyses, “AMA is urging federal and state regulators to carefully review the proposed mergers and use enforcement tools to preserve competition,” AMA President Steven J. Sack, M.D. said in a statement.

— Andrew A. Kasper, Robinson, Bradshaw & Hinson, P.A., Charlotte, N.C.


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