Texas health insurance may experience new challenges if two proposed mergers between major health insurance companies go through.
Humana and Aetna are planning a $37 billion merger and Anthem is in the process of acquiring Cigna for $54 billion. If the deals go through, it would reduce the industry from five major competitors to only three: an Anthem-Cigna entity, an Aetna-Humana entity, and UnitedHealth Group. Each of these companies would generate revenue of more than $100 billion per year if the mergers happen.
The proposed mergers are currently being sued by The Department of Justice (DOJ) and attorneys general in multiple states. The DOJ says the deals violate antitrust laws and would lead to higher healthcare costs for Americans.
The DOJ alleges the Humana-Aetna merger “would lead to higher health-insurance prices, reduced benefits, less innovation, and worse service for over a million Americans” and refers to the acquisition of Cigna by Anthem as the “largest merger in the history of the health insurance industry.”
U.S. Attorney General Loretta Lynch also explained the lawsuit at a news conference, saying:
“If allowed to proceed, these mergers would fundamentally reshape the health insurance industry. They would leave much of the multitrillion-dollar health insurance industry in the hands of three mammoth insurance companies, drastically constricting competition in a number of key markets that tens of millions of Americans rely on to receive health care.
“Among other consequences, the number of health insurance options available to nationwide employers would shrink … Two of the largest and fastest growing providers of Medicare Advantage plans, which millions of seniors rely on for crucial medical coverage, would combine into just one. And competition would be substantially reduced for hundreds of thousands of families and individuals who buy insurance on public health exchanges established under the Affordable Care Act.”
How the Mergers Would Impact Texas Health Insurance
The mergers could potentially have an impact on Texas health insurance. All Texas health insurance carriers are already proposing premium increases on the Obamacare exchange for 2017, including Aetna (+15.19%), Cigna (+23.5%), and Humana (+43.35%).
These proposed rate increases could potentially go up even more if the mergers are approved. For example, Humana is currently requesting an increase of over 43% for 2017, while Aetna is proposing much less than that with an increase of 15%. If the merger decides to go along with Humana’s rate increase, those who were on the Aetna’s insurance plan will see prices significantly jump.
It’s important to note, however, that these rates are just being proposed at this time and have not yet been approved by state and federal regulators. Plans will need to evaluate market conditions and regulatory approvals before a decision is made.
UnitedHealthcare is planning to leave the exchange in Texas by the end of this year. The company’s exit will also affect the following Texas health insurance companies:
- All Savers Insurance Company: 128,055 members
- UnitedHealthcare Life Insurance Company: 28,611 members
- UnitedHealthcare Insurance Company: current member count not available, small group products for UnitedHealthcare Insurance Company will still be available off-exchange in 2017
Along with insurance rates on the Texas Obamacare exchange, the mergers will also impact employer-provided commercial health insurance plans in the state. Overall, there will be less competition, which could result in higher prices for employers.
Will the Mergers Fight the Lawsuits? Time Will Tell
Clearly, the two mergers may have an impact on Texas health insurance. The companies involved in the mergers are currently deciding how to proceed in light of the lawsuits. Aetna and Humana said they plan to “vigorously defend the companies’ pending merger.” Cigna released a statement saying they are currently evaluating their options in response to the suit.
According to Bloomberg, if the companies decide to fight the lawsuits, it could take months before an official legal decision is made.