Consolidation in the health industry often means fewer choices and competition, with no benefit for patients or the public. Health insurance companies should not be allowed to get bigger unless they get better. In California, the top five insurers control over 90% of the market. Health Access closely monitors mergers and advocates for strong consumer protections and other conditions to ensure that these mergers are in the interest of California consumers and the health system on which we all rely.
In seeking regulatory approval for these mergers, the burden is on the merging companies to show that consumers will actually benefit in the form of lower premiums, lower out-of-pocket costs, higher quality care, and reduced health disparities.
With several pending insurance mega-mergers, insurers must be required to comply with strong, enforceable conditions to ensure consumers receive the benefits promised by company executives and should be required to address any existing problems relating to cost, quality, and customer service.
New Legislation: AB 595 (Wood) to Improve Oversight of Health Plan Mergers
With the landscape of health plans becoming increasingly consolidated, new legislation was signed into law in 2018 to institute stronger state oversight over health plan mergers, in a big win for patients and the public interest.
AB 595 will strengthen the Department of Managed Health Care’s (DMHC) oversight over health plan mergers by requiring health plans seeking to merge to get approval from DMHC, allowing DMHC to reject mergers that negatively impact competition, or to impose conditions to protect patients and the public interest, and increases transparency and public participation in the merger review process, including public hearings for mega-mergers. Health plan mergers need to be evaluated to ensure that they are in the interest of patients and public, not just shareholders and executives.
- Health Access Fact Sheet: AB 595 (Wood)
- Health Access Blog: Governor Brown Signs Bill to Improve Oversight of Health Plan Mergers (September 11, 2018)
The US Department of Justice has approved the merger of CVS Health and Aetna, continuing the trend of “diagonal” mergers and the further consolidation of mega-health care corporations. This is unprecedented merger: between CVS, a major pharmacy chain and one of the nations largest independent pharmacy benefit managers (PBM), and Aetna, one of the nations largest insurers, consolidates the health industry further.
- Health Access Letter to DMHC (May 17, 2018)
- Health Access Blog: CVS-Aetna Merger Approved With Conditions, As California Seeks Stronger Oversight (October 10, 2018)
Cigna Health Insurance is seeking to purchase Express Scripts, one of the nation’s largest pharmacy benefit managers (PBM). Similar to the CVS-Aetna merger, this proposed merger continues the trend of “diagonal” mergers within the health care industry.
- Health Access Letter to DMHC (October 10, 2018)
Nonprofit Hospital Mergers – Maintaining Charity Care
Nonprofit hospitals seeking to sell or change ownership must get approval from the Attorney General (AG), who evaluates whether the transaction will have a significant effect on the availability or accessibility of health care services to the affected community. The AG often requires hospitals to maintain their charity care programs as a condition of approving the transaction, along with other conditions to ensure essential health care services are available to the community. A number of hospitals have gone back and asked the AG to allow them to reduce their charity care obligations. Health Access opposes these requests because charity care continues to be a needed and valued part of the safety net.
- California Healthline article: California Hospitals Must Cough Up Millions To Meet Charity Care Rules (Pauline Bartolone, April 18, 2018)
- California Healthline article: Hospitals Want To Cut Back On Free Care. Critics Say No Way (Pauline Bartolone, February 15, 2018)
- Letter to Attorney General (February 8, 2018)
- Letter to Attorney General (December 18, 2017)
- Letter to Attorney General (November 18, 2016)
- Letter to Attorney General re: Saint Agnes Medical Center’s Request to Reduce Charity Care (July 1, 2016)
Anthem, one of the largest insurers in the state and nation, proposes to acquire Cigna for $48.3 billion. This merger would consolidate the national health insurance market from five major companies to just three. California regulators are reviewing this merger.
Centene proposal to acquire Health Net for $6.8 billion was approved by both the DCI and DMHC in March of 2016. This merger will allow Centene to have a significant presence in California, gain entry into our commercial market and Covered California and drastically increase its participation in the Medi-Cal program by nearly sevenfold.
- Health Access letter to California Department of Insurance (January 29, 2016)
- Blog Post: Centene/Health Net Executives Answer to Regulators, Consumer Advocates, and the Public (January 25, 2016)
- Information about CDI’s review of the Centene-Health Net Merger (2015-2016)
- Video of CDI’s hearing (January 22, 2016)
- Health Access letter to the Department of Managed Health Care (DMHC) (December 14, 2016)
- Blog Post: At DMHC Public Meeting, Consumer Groups Question Proposed Centene-Health Net Merger (December 8, 2016)
Aetna is proposing to acquire Humana, a large player in the Medicare Advantage market. Aetna has a troubling track record in California’s commercial market, including imposing unreasonable rate increases on small business purchasers. This merger raises concerns about its effects on California’s commercial market, where most of Aetna’s California business is based. The merger will also impact the Medicare marketplace, resulting in less competition and fewer options for California consumers.
- Health Access letter to CDI re: Aetna-Humana Merger (March 2, 2016)
- Health Access letter to DMHC re: Aetna-Humana Merger (January 11, 2016)
- Blog Post: Consumer Groups Question Aetna-Humana Proposed Merger at DMHC Public Meeting (January 6, 2016)
The merger between Blue Shield of California and Care1st was completed in November 2015. Blue Shield, a large California-based insurer, purchased Care1st, a Medi-Cal managed care health plan in Southern California. Blue Shield’s acquisition of Care1st enabled Blue Shield to participate in California’s Medi-Cal program for the first time. In addition to our concerns about consumer protections, the Blue Shield-Care1st merger raises questions about Blue Shield’s nonprofit status and assets, including the $4.2 billion it holds in excess reserves and if those assets are subject to charitable trust obligations.
- Health and Consumer Advocates Sign-On Letter to Blue Shield re: Funding for Blue Shield Foundation (December 4, 2015)
- Blog Post: Blue Shield Tries To Back Out Of $140 Million Commitment to California Communities (November 18, 2015)
- Blog Post: Blue Shield-Care1st merger approved, with conditions (October 9, 2015)
- DMHC’s order approving the merger and required undertakings (October 8, 2015)
- Health and Consumer Advocates letter to DMHC re: Blue Shield-Care1st Merger (July 6, 2015)
- Health Access letter to DMHC re: Blue Shield-Care1st merger (June 12, 2015)
- Blog Post: DMHC Hearing on Blue Shield Acquisition of Care1st Gets at Larger Questions on Nonprofit Obligations (June 9, 2015)
- Health Access White Paper: What is the Role of a Nonprofit Insurer? Should the Affordable Care Act Change The Expectations of Insurers With a Public Service Mission? (June 5, 2015)
Nonprofit Hospital Mergers – St. Joseph-Providence Hospitals
St. Joseph and Providence are two major Catholic hospital chains with facilities throughout California. Health Access has requested the Attorney General to ensure that all existing hospital services remain open for at least ten years, require existing reproductive health services to be maintained, and more robust charity care to meet ongoing access and affordability needs of communities served by these hospitals. We also raise concerns about how this merger might lead to higher prices and less competition.
Nonprofit Hospital Mergers – Daughters of Charity Health System
In December 2015, the Attorney General granted conditional approval of a change of control and governance of the nonprofit Daughters of Charity Health System (DOCHS), allowing BlueMountain Capital Management to operate DOCHS’ six hospitals and gain a right to purchase the chain. Health Access advocated for strong conditions to ensure the hospitals and current services remain open for ten years and charity care is maintained.
- Blog Post: Attorney General Approves Daughters of Charity Hospital Deal, with Key Conditions (December 4, 2015)
- Attorney General’s decision conditionally approving the transaction with the full list of conditions (December 3, 2015)
- Health Access letter to Attorney General re: Proposed Change in Control and Governance of Daughters of Charity Health System (October 20, 2015)
- Blog Post: Attorney General Considers New Deal for Daughters of Charity Hospital System (October 16, 2015)
The Attorney General previously granted conditional approval of the sale of DOCHS to Prime Healthcare, a for-profit company. Health Access opposed this merger unless it included strong conditions to ensure DOCHS’ hospitals and services would remain open to the community. Prime Healthcare subsequently backed out of the deal.
- Blog Post: AG Approves–With Conditions–Prime Takeover of 6 CA Hospitals (February 21, 2015)
- Blog Post: Will the AG Let For-Profit Prime Takeover the Daughters of Charity Health System? (January 12, 2015)
- Health Access letter to Attorney General re: Sale of Daughters of Charity Hospital System to Prime Healthcare (December 29, 2014)