AMA urges Justice Department, FTC to modernize payer merger regulations

The American Medical Association penned a letter to the Justice Department and Federal Trade Commission April 21, urging the federal agencies to modernize the enforcement of antitrust laws regarding mergers in the health insurance market.

AMA CEO and Executive Vice President James Madara, MD, wrote the letter because the group believes "competition will lower premiums, force insurers to enhance customer service, pay bills accurately and on time and develop and implement innovative ways to improve quality while lowering costs."

The letter also cites the need for competition to allow physicians to negotiate contract terms.

The AMA is worried that without enough competition in the health insurance market and a focus on monopsony guidance, payer monopsonists won't be incentivized to lower member costs. The letter said the closest the government has come to successfully litigating monopsony concerns was the proposed 2015 merger between Anthem and Cigna.

"The evidence suggests that to the extent a health insurer merger would eliminate a potential competitor, the lost competition would be permanent, given high market entry and switching barriers," the letter states. "Consequently, a proposed health insurer acquisition of a potential competitor in a typically highly concentrated health insurance market should be met with extreme skepticism by antitrust enforcers. One good expression of this skepticism would be new merger guidelines making the burden of health insurer procompetitive rebuttal of lost competition very high."

In January, the two federal agencies kicked off a public comment process regarding their work to "modernize federal merger guidelines to better detect and prevent illegal, anticompetitive deals."

The American Hospital Association has also called for updated federal merger guidelines this year.

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