A wave of hospital mergers and acquisitions spreading across the U.S. has the health insurance industry attempting to stand in the way with legalese, Congressional lobbying and in the court of public opinion.
America’s Health Insurance Plans, the powerful lobby and trade group representing the biggest names in commercial insurance appears to be leading the charge battling deals in New York, Chicago and beyond.
“Consolidation promises greater efficiency, but all that ever materializes is greater costs,” Brendan Buck, former press secretary to Speaker of the U.
S. House John Boehner, who was tapped this spring to be vice president of communications at America’s Health Insurance Plans (AHIP) told the Chicago Sun-Times following news two of the wealthiest hospital operators in the city would merge.In Chicago, Advocate Health Care and NorthShore University HealthSystem want to merge to form the 11th largest tax-exempt health system in the nation.
The stakes are high for health insurance companies as they manage millions and millions more newly insured subscribers thanks to the Affordable Care Act, the signature legislative achievement of President Obama.
Eight million individuals signed up for private coverage this year on government exchanges while millions more are getting benefits from private plans under the expanded Medicaid program for the poor. The number of Medicaid recipients enrolling in private plans is growing as states hand off more and more business to private insurers to administer.
AHIP’s membership includes some of the biggest names in health insurance like Aetna AET -1.78% (AET), Cigna CI -1.1% (CI), Humana HUM -0.88% (HUM) and UnitedHealth Group (UNH).
The merger wave comes just as hospitals and health insurers are reaping more paying customers.
But hospitals are saying along with the new laws come additional expenses to integrate their operations to better coordinate medical care for patients. Mergers, they say, would allow them to streamline and be more efficient.
But the Federal Trade Commission appears to be watching closely.
Just last month, the Federal Trade Commission joined the Idaho Attorney General in challenging the purchase by St. Luke’s Health System of Idaho’s largest independent doctor practice.
AHIP joined with a brief filed in federal district court with the insurance industry taking issue with the idea that health reform under the ACA means there is a need for more consolidation of medical care providers.
“The marketplace is moving strongly toward reform without a need for anticompetitive provider consolidation: and anticompetitive provider consolidation will undercut and impede reform,” AHIP said in an amicus brief filed in the Idaho case.
The FTC has been difficult to beat. Earlier this year, for example, the 6th Circuit U.S. Court of Appeals ordered Ohio-based ProMedica to unravel its acquisition of St. Luke’s Hospital of Maurnee, Ohio, with the court siding with the Federal Trade Commission’s contention that the merger would lead to less competition and higher prices.
The insurance industry sees this as a broader front in the battle over how hospitals are paid. Increasingly, insurers and the government under the health law are moving away from traditional fee-for-service payments to value-based care that emphasizes more money to primary care and outpatient providers to improve health outcomes. At the same time, hospitals are penalized for re-admissions and mistakes.
“Health plans are at the forefront of efforts to replace the fee-for-service system with a system of paying for value – leading to better health outcomes and increased affordability,” AHIP’s brief said in the Idaho case. “These alternative payment models evolve from retroactive payment to prospective models that focus on accountability, shared risk and population-based care.
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