Talk of potential mergers in the medical insurance industry has doctors and hospitals worried about health plans having too much clout over consumer choices and prices.
Speculation has run rampant that some of the nation's biggest health plans may be looking to consolidate, including a possible takeover of Humana Inc. by Aetna Inc., as well as UnitedHealth Group Inc.'s interest in Coventry Health Care Inc.
Already, 1 in 6 metropolitan areas in a 2008 study of more than 300 U.S. markets is dominated by a single health insurer that controls at least 70% of consumers enrolled in health maintenance organizations or preferred provider organizations, according to the American Medical Assn.
"It becomes difficult for patients to have choice and doctors to get their patients the care that is needed because a monopoly has been created," said Dr. James Rohack, a Texas cardiologist and president-elect of the AMA. "Patients don't have as many other options."
Health insurers long have billed industry consolidation as a way to better control costs through efficiencies and leveraged buying power.
Also, the recession is giving health plans another reason to merge as they lose business because more companies and workers can't afford coverage.
And the federal government's expressed desire to further cut payments to insurers that receive Medicare dollars could fuel the industry's push to consolidate.
With company-paid medical costs rising 8% to 10% this year for large companies, and higher for small businesses, health plans need more enrollees in order to spread out costs for their employer clients. A larger pool of patients gives benefits companies more power when negotiating payments with doctors and hospitals.
"It's probably an interesting time to do a deal, given the low share prices," said Todd Swim, a worldwide partner with Mercer, an employee-benefits consulting firm.
"Another issue that is plaguing the market now is the potential Obama healthcare plan and ramifications on those companies in the Medicare business."
Health plans and the employers that hire them control the choices of doctors and hospitals. Providers worry that increased consolidation would add to their concerns about deteriorating reimbursement from government health programs as the federal deficit rises and state budgets tighten.
