On January 4, 2016, the Department of Managed Health Care (DMHC) held a public meeting on the proposed merger of Aetna and Humana. The public meeting was requested by consumer groups including Health Access, Consumers Union, and others to raise questions about the structure of the deal, its potential impact on California’s patients and health care systems, and ensure proper oversight as insurance companies merge and become larger.
The proposed Aetna-Humana merger is one of three pending insurer mergers being reviewed by DMHC. Earlier this year, the DMHC approved a merger between Blue Shield and Care1st, following Health Access’s and other consumer groups’ request for strong conditions to address potential negative impacts. Health Access is also monitoring the proposed Anthem Blue Cross-Cigna and Centene-Health Net mergers and will continue to fully engage state regulators, including the DMHC, to ensure strong consumer protections and a commitment to improving the health care delivery system.
Tam Ma, Health Access California’s Policy Counsel, provided comment on behalf of California consumers, raising questions about Aetna’s track record in California and if they should be allowed to have even greater market share. Specifically, she made the case that to ensure that this merger—and others— is in the public interest, insurers should not be allowed to get bigger unless they commit to getting better, sharing skepticism about whether bigger is actually better for consumers.
Lack of Consumer Protections a Concern
In her testimony, Tam Ma focused on Aetna’s track record in California’s commercial market and its lack of respect for California law as well as basic consumer protections.
- Routine Medical Survey: Through DMHC’s most recent Routine Medical Survey, Aetna was found to have three major deficiencies, of which one had still not been corrected three years later. DMHC found that Aetna makes it difficult for patients to submit grievances and fails to provide information about California’s HMO grievance process on its website. If Aetna has repeatedly failed to meet basic consumer protections such as posting consumer rights information on their website, we question whether Aetna should be allowed to get bigger.
- Enforcement actions: Aetna has been the subject of numerous enforcement actions by DMHC, most of which stem from its poor handling of patient grievances, from which it has had 45 violations since 2011. Aetna has accumulated over $100,000 in fines in the last year alone and in 2014 was fined $200,000 for failing to process claims and provider disputes in a timely manner.
- Unreasonable rate increases: Aetna has proceeded with rate increases for its small group business that the DMHC found to be unreasonable. As a result, small businesses paid more than they should have for health care. In fact, DMHC Director Shelley Roulliard cited the pattern of going ahead with unreasonable rate increases in the opening of the hearing. Given their track record on proceeding with unjustified rate increases, consumers should be doubtful that Aetna will pass along cost savings to consumers and other purchasers.
- Quality ratings: Aetna has had lackluster quality ratings; in patient surveys, patients give Aetna poor ratings for not helping them access the care they need when they needed it. Further, Aetna’s clinical performance ratings range from poor to fair in for all eleven health conditions covered.
Health Access also posed two questions to the representatives from Aetna and Humana, who had an opportunity to respond to public comment. First, why is this merger necessary? Why can’t Humana expand in California without he partnership with Aetna? Second, what concrete commitments and investments can Aetna and Humana make today about how this merger would benefit patients and the state’s health system? The representatives from Aetna and Humana did not respond to these questions in their closing statements.
Several other organizations provided public comment regarding the proposed merger. A couple in favor of the merger cited the negligible number of consumers affected while also being able to learn from Humana’s experience in other markets. Consumers Union raised similar issues and questions as Health Access, including concerns about unreasonable rate increases, skepticism about passing savings along to consumers and concerns with low consumer satisfaction scores.
Given Aetna’s and Humana’s track records, Health Access and other consumer advocates are urging state regulators and policymakers to scrutinize this merger and other pending deals. If regulators approve the mergers, they must impose strong, enforceable conditions to ensure insurance companies improve and strengthen consumer protections if they want to increase their market share.
If you or your organization would like to submit comments about this merger or the larger questions at stake concerning mergers in general, you have until Monday, January 11, 5:00 PM to submit your comments to email@example.com.