When federal judges hear arguments over the proposed mergers of Aetna and Humana and Anthem and Cigna, they will have to consider two distinct allegations made by the U.S. Department of Justice, which is attempting to block the two deals.
On one hand, argues the Obama administration, the megamergers will leave consumers with fewer insurance options and significantly reducing competition in certain parts of the country.
On the other hand, mega-insurance companies seeking to merge with other industry giants have strived mightily to convince federal and state regulators that the newly formed companies won't be that big.
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To that end, they will present data showing that their market share represents a small minority of the overall insurance market. Aetna and Humana, for instance, will argue that their Medicare Advantage plans should be considered within the context of the entire Medicare market, which includes the private sector Advantage plans as well as traditional Medicare, which 70 percent of seniors still opt for.
Big insurers that are seeking to become even bigger also argue that their increased size will be a benefit to consumers. Their large market share will make them more powerful in price negotiations with hospitals, allowing them to deliver lower-cost health care to their members.
Plenty of consumer advocates and experts are skeptical of that argument.
"I don't find any evidence that reduction in provider payment leads to reduction in insurance premiums, and I don't know of any study that does," Leemore Dafny, a Harvard professor of economics who has studied insurance markets, told NPR.
However, also speaking to NPR, Yevgeniy Feyman, who conducts research at the Harvard T.H. Chan School of Public Health and is a fellow at the conservative Manhattan Institute, says the insurers' might have a point.
"There's some literature out there that does show that when you have relatively concentrated insurance markets, they tend to keep actual hospital costs down," he says.
The question, of course, is how much of the cost savings insurers pass on to the consumers. If there is little competition in the insurance market, there is little incentive for an insurer to not simply pocket the savings entirely as profit.
The solution could be simply requiring insurers to spend a certain percentage of premium revenue on members, rather than profits. Plans offered on the Affordable Care Act exchanges are already subjected to such restrictions.
Finally, the government also has a response to insurers' claim that they will lower prices: maybe that's not a good thing. If insurers become too powerful, argues the Justice Department, they might squeeze hospitals and doctors so much that they will do damage to the health care system, deterring people from becoming doctors or setting up hospitals and clinics.
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