An­titrust scru­tiny of merg­ers … sta­bil­ity of ACA mar­kets … net­work ad­e­quacy rules

Modern Healthcare - - NEWS - By Bob Her­man

The health in­sur­ance in­dus­try will be watch­ing and wait­ing to see if an­titrust reg­u­la­tors ap­prove sev­eral big in­sur­ance merg­ers, whether the Af­ford­able Care Act’s ex­change mar­ket grows more sus­tain­able, and whether states adopt new reg­u­la­tions gov­ern­ing provider net­work ad­e­quacy.

Loom­ing above all those is­sues is the pos­si­bil­ity of the elec­tion of a Repub­li­can pres­i­dent who would seek to jet­ti­son the ACA frame­work and re­place it with an en­tirely dif­fer­ent health­care fi­nanc­ing frame­work.

The U.S. Jus­tice Depart­ment’s an­titrust di­vi­sion is re­view­ing Aetna’s $37 bil­lion pur­chase of Hu­mana and An­them’s $54 bil­lion deal for Cigna Corp. Aetna would be­come the largest Medi­care Ad­van­tage in­surer. An­them and Cigna com­bined would cre­ate an even big­ger pow­er­house vy­ing for em­ploy­ers’ lu­cra­tive busi­ness. Cen­tene Corp. is also buy­ing Health Net in a $7 bil­lion deal that would consolidate Med­i­caid health plans.

The Obama ad­min­is­tra­tion has halted sev­eral big cor­po­rate merg­ers on the grounds that they would have re­duced com­pe­ti­tion and po­ten­tially driven up prices. In its fi­nal months, the ad­min­is­tra­tion may feel em­bold­ened to heed the calls from provider and con­sumer groups to nix the deals. On the other hand, ex­perts say, Jus­tice may OK the deals—al­beit with re­quire­ments that the merged com­pa­nies di­vest plans in some mar­kets— be­cause there are still so many other health in­sur­ers op­er­at­ing in most mar­kets around the coun­try. In ad­di­tion, the ad­min­is­tra­tion could try to se­cure as­sur­ances that the merged com­pa­nies will not stop sell­ing ACA ex­change plans.

“The gov­ern­ment can use the merger ap­proval to ex­tract con­ces­sions it can­not oth­er­wise force on in­sur­ers, so the gov­ern­ment would waste an op­por­tu­nity if it just flatly op­poses the merg­ers,” said Erik Gor­don, a health­care busi­ness pro­fes­sor at the Univer­sity of Michi­gan. De­ci­sions are ex­pected by this sum­mer. The ACA’s in­sur­ance ex­changes re­main a wild card. HHS pre­dicted 10 mil­lion Amer­i­cans will have cov­er­age through the mar­ket­places by the end of 2016, a mod­est uptick from the 9.1 mil­lion en­rollees at the end of 2015. Unit­edHealth Group will de­cide this year whether it will bail on the in­di­vid­ual in­sur­ance ex­changes in 2017 be­cause it lost a lot of money on its ex­change busi­ness in 2015.

The ex­change risk pools skew to­ward older, sicker peo­ple, and early data in­di­cate that younger, health­ier peo­ple still aren’t sign­ing up in droves even as the tax penalty for not buy­ing cov­er­age goes up. Unit­edHealth said con­sumers are gam­ing the sys­tem by us­ing spe­cial mid-year en­roll­ment rules to sign up when they get sick, though oth­ers ques­tion this. The pub­lic’s re­ac­tion to the much-higher tax penal­ties will be watched closely.

In­sur­ers will have to think es­pe­cially hard this spring about how to price in­di­vid­ual-mar­ket plans for 2017 be­cause of sev­eral fac­tors. For one, grand­fa­thered plans that are not com­pli­ant with ACA rules no longer can be of­fered for 2017. That should bring more healthy en­rollees into the ACA-gov­erned mar­ket. In ad­di­tion, two of the three ACA risk-mit­i­ga­tion pro­grams—risk cor­ri­dors and rein­sur­ance—will sun­set by next year, re­duc­ing the pro­tec­tions against ad­verse se­lec­tion that plans now enjoy.

States will de­cide whether to tackle the prob­lems of net­work ad­e­quacy and sur­prise out-of-net­work med­i­cal bills, which are caus­ing grow­ing con­sumer un­rest. The Na­tional As­so­ci­a­tion of In­sur­ance Com­mis­sion­ers has of­fered model leg­is­la­tion.

“Peo­ple may be up­set or shocked or un­happy if they ul­ti­mately can’t go to cer­tain providers, but I would be sur­prised if the en­tire mar­ket swung the other way to­ward broader net­works and higher pre­mi­ums,” said Erin Trish, a health pol­icy pro­fes­sor at the Univer­sity of Southern Cal­i­for­nia.

“Peo­ple may be up­set or shocked or un­happy if they ul­ti­mately can’t go to cer­tain providers, but I would be sur­prised if the en­tire mar­ket swung the other way to­ward broader net­works and higher pre­mi­ums.”

Erin Trish, health pol­icy pro­fes­sor at the Univer­sity of Southern Cal­i­for­nia

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