CDI Hearing on CVS-Aetna Merger TODAY; CA Assembly Considers Bill to Increase Merger Oversight TOMORROW

This week, consumer advocates are raising concerns about major health care mergers and their impact on patients and the public.
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For immediate release: Tuesday, June 19, 2018

For more information, contact:
Anthony Wright, executive director, Health Access California, 916-870-4782 (cell)
Rachel Linn Gish, director of communications, Health Access California, 916-532-2128 (cell)

MERGER WATCH: 

CVS-AETNA MERGER TO BE SCRUTINIZED TODAY AT SF HEARING OF CALIFORNIA DEPARTMENT OF INSURANCE; INCREASED OVERSIGHT ON HEALTH PLAN MERGERS UP WEDNESDAY IN CALIFORNIA STATE ASSEMBLY COMMITTEE

  • Health consumer advocates raise concerns about the proposed CVS-Aetna merger at California Department of Insurance hearing TODAY at 10:30AM in San Francisco. Watch here.
  • AB 595 (Wood), to give Department of Managed Health Care (DMHC) increased authority over mergers, will be heard in Senate Health Committee tomorrow at 1:30PM at the State Capitol.
  • Five Insurers Control 90% of Market – Any Further Consolidation Is Likely to Result in Fewer Choices and Higher Prices for the 14 Million Californians in Private Coverage

SACRAMENTO, CA—This week, consumer advocates are raising concerns about major health care mergers and their impact on patients and the public. Today, Health Access, the statewide health care consumer advocacy coalition, will testify against the proposed CVS-Aetna merger at a California Department of Insurance (CDI) hearing at 10:30am in San Francisco. On Wednesday, the California State Assembly will take up AB 595 by Assemblymember Wood that would institute stronger state oversight over health plan mergers and protects Californians from changes to the health plan market that may lead to higher health costs. Economic studies show that past health insurer mergers led to premium increases and have no demonstrable effect on improving health care quality.

“Experience shows that bigger is not necessarily better for consumers. Aetna has repeatedly pursued unreasonable rate increases and have failed to abide by basic consumer protections. CVS has offered no information on how it would correct any of their problematic practices by Aetna after they merge,” said Anthony Wright, executive director of Health Access California, the statewide health care consumer advocacy coalition. “We need the state to scrutinize mergers and ensure they are actually good for patients and the public interest. AB595 will protect the millions of Californians who could be negatively affected when a health plan seeks even more market power.” 

AB 595 strengthens the Department of Managed Health Care’s (DMHC) oversight over health plan mergers by:

  • Requiring health plans seeking to merge to get prior approval from DMHC;
  • Allowing DMHC to reject mergers that negatively impact competition;
  • Requiring health plans to get better if they are allowed to get bigger: If DMHC approves a merger, it must be conditioned on the health plan improving quality and reducing health disparities.
  • Ensuring the merged entity can comply with all of the consumer protections in Knox-Keene Act (financial solvency, access to care, network adequacy, handling of consumer complaints, claims processing, etc); and
  • Increasing transparency and public participation in the merger review process.

Although California has a relatively more competitive insurance market than other states, three companies now control nearly 80% of the market and the top five insurers control over 90% of the market. With health insurance markets already highly consolidated, mergers are likely to result in fewer choices and higher prices for the millions of California consumers enrolled in private coverage. Private insurance premiums and out-of-pocket spending are already high and projected to grow. Health insurance premiums for family coverage have seen a cumulative 216% increase since 2002, compared to a 37% increase in overall prices. Current law gives regulators some oversight over insurer mergers, but they are insufficient to fully protect consumers.

California has seen a number of proposed health plan mergers in recent years: Blue Shield-Care 1st, Centene-Health Net, Aetna-Humana, and Anthem-Cigna. While the U.S. Department of Justice has blocked the latter two mergers, the industry is expected to further consolidate, as the recently announced Aetna-CVS merger suggests. DMHC, which regulates health coverage for 96% of covered lives in California, needs to be able to scrutinize these deals and ensure they are good for California consumers.

Resources:

AB 595 (Wood) Fact Sheet

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