Hospitals, doctors funded consumer opposition to insurance mergers

Hospital and doctor groups helped fund the consumer opposition to the two big health insurer mergers the Justice Department sued to block Thursday.

Hospitals, which have been merging fast and furiously on their own, jump started the campaign against the mergers of Aetna and Humana and Anthem and Cigna by funding the Campaign for Consumer Choice with unions. Insurers said they needed to consolidate to deal more effectively with ever-larger hospital companies, which have also been gobbling up doctors' practices.

Doctor groups also actively opposed the deals and were active in both the Campaign for Consumer Choice and the Coalition to Protect Patient Choice.

"The opposition was overwhelming," said David Balto, a former Federal Trade Commission antitrust lawyer representing the Coalition to Protect Patient Choice. "We spoke with one voice."

Balto says his group shouldn't be confused with the Campaign for Consumer Choice. He and the group were only representing consumers groups when they testified in 12 states against the deals. Unions representing health care workers also funded his effort, Balto says.

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Dozens of state and national consumer and doctor groups sent a letter to the Justice Department late last month urging it to block the deals and decrying the lack of transparency in its deliberations.

"These proposed health insurance company mergers will stifle competition, raise prices and reduce choice for patients in Connecticut and dozens of other states," Robert Seligson, president of the Physician's Advocacy Institute, said in a recent statement.

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Tom Swan, executive director of the Connecticut Citizen Action Group — which Ralph Nader founded in 1970 — said the group had long worked on insurance issues in the state and was already involved before the coalitions were formed.

Swan says his group works with and against doctors and hospitals, depending on the issue, and he knew hospitals funded the Campaign for Consumer Choice in other states.

Frances Padilla, president of the Universal Health Care Foundation of Connecticut, says her group fights both insurer mergers and hospital mergers, which she has have accelerated in the state over the past four years. With only two insurers on the Affordable Care Act exchange for the state — and just one for small businesses — Padilla said these mergers would have made it less likely Cigna would have entered the exchange market.

"They can just raise prices together," says Padilla, who calls it the "sumo wrestler theory. It's about both large entities getting bigger and raising premiums."

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Doctor groups got involved to fight for consumer interests and their own.

"The concern was access to patient care, not just reimbursement," says Matthew Katz, CEO of the Connecticut Medical Society, which represents doctors. "We are concerned anytime any market consolidates."

Hospitals were not part of the society's efforts with the consumer groups, Katz says, but he acknowledged hospitals helped to pay for the early work.

Consumers are the winners in Justice's decision, says Michael Rea, CEO and founder of Rx Savings Solutions, which negotiates drug prices for insurance companies.

"At the end of the day, they are the ones carrying the financial burden and more competition will demand increased innovation and efficiency from the market," Rea says.

The Justice Department agreed.

“Competition today drives these four successful firms to fight to give us affordable options,” said Principal Deputy Associate Attorney General Bill Baer.  "There is no reason to put that dynamic at risk and that is why we are asking the court to stop these mergers and keep competition working for the benefit of the American consumer.”