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July 22, 2016

DoJ Lawsuits Sabotage Insurers' Ability to Survive Obamacare

  Institute for Policy Innovation

DALLAS – The Department of Justice announcement to block two separate health insurer mergers sabotages those insurers’ ability to survive Obamacare’s financially unsustainable and onerous regulatory environment in the health insurance marketplace.

“The Obama administration is attempting to block the Aetna-Humana and Anthem-Cigna mergers because it wants more competition, but if compounding financial losses force these companies to drop out of the exchanges, there won’t be any competition,” said Institute for Policy Innovation (IPI) resident scholar Dr. Merrill Matthews.  “Two larger health insurers are better than none.”

“Health insurance company mergers started shortly after the ACA passed in order to survive the new environment of high costs and government regulations,” said Matthews. “Not only was it completely predictable, we predicted it.  By consolidating, the companies are trying to achieve greater economic efficiencies.”

For example, Arizona’s Maricopa County was once praised as a center of robust competition with eight insurance companies competing in its ACA exchange. But in just a few years, that number will drop to only three insurers, two of which are Aetna and Cigna. If Washington stifles these same companies’ attempts to stay afloat in the exchanges, Maricopa County and other areas could see only a single insurer available in its marketplace—if any at all.

“If the administration were really concerned about competition and access to a range of health insurance policies, it would permit these mergers to go forward," said Matthews. "But if the Department of Justice’s stonewalling is successful, those insurers will likely join many others and pull out of the Obamacare exchanges, leaving even less competition and higher prices. And that will force the administration to devise even more excuses for why health care costs are exploding.”


 

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