WASHINGTON (Reuters)—Republican and Democratic lawmakers expressed concern about two multi-billion dollar insurance mergers on Tuesday, using a Senate hearing to take issue with the companies’ arguments that they face expanding competition from new rivals.
Sen. Mike Lee (R-UT), who chairs the Senate Judiciary Committee’s antitrust subcommittee, said he was worried that consumers would be “locked into the offerings of a few dominant companies.”
The hearing was called to discuss Anthem Inc’s planned $47 billion takeover of rival Cigna Corp. and Aetna Inc.’s plan to buy rival Humana Inc. for about $37 billion. The deals, announced in July, would reduce the number of nationwide insurers from five to three.
The companies argue that their deals should be uncontroversial because they have little overlap. Overall, Aetna serves 46 million people on the commercial market while Humana has 14 million customers who are mainly served through Medicare Advantage.
Anthem, the largest Blue Cross Blue Shield health plan, has 38 million customers in a diversified network while Cigna insures 14 million people, mostly through large corporate employers.
The CEOs of Aetna, Mark Bertolini, and Anthem, Joseph Swedish, argued that they were facing growing competition from a variety of avenues.
Sen. Richard Blumenthal (D-Conn.) disagreed and noted that earlier mergers had pushed prices up, saying, “These mergers may be the triumph of hope over experience.
“I’m deeply troubled by evidence that shows that neither providers nor consumers benefit (from consolidation),” he said.
Swedish argues that “competition is becoming more robust and not less,” pointing to a two-year old insurance company Oscar, which has 40,000 members.
“What I can share with you is that there are many new players who have entered the market,” he said.
Nationally, premiums paid for employer-sponsored health insurance rose 4% in 2015 and workers are paying sharply higher deductibles, the Kaiser Family Foundation/Health Research & Educational Trust said on Tuesday.
Both Lee and Senator Amy Klobuchar, the top Democrat on the panel, pressed the companies on why they decided not to expand their existing operations but instead opted to buy a rival.
Both said it was cheaper and faster to merge, and that speed mattered. “In that regard, this economic combination makes a lot of sense for us because we can get to market faster,” said Anthem’s Swedish.