Economists: 3 takeaways from failed insurer mega-mergers

More than six months after proposed Anthem-Cigna and Aetna-Humana mergers collapsed, four economists testifying in the cases met in Chicago to discuss the deals' sticking points and implications.

Here are Becker's Hospital Review's three takeaways from the conference, hosted by Evanston, Ill.-based Northwestern University's Kellogg School of Management Sept. 14. 

1. The Anthem-Cigna merger failed, in part, because it couldn't prove large efficiencies — a point further incensed by public feuding. Indianapolis-based Anthem and Bloomfield, Conn.-based Cigna argued their combined size would allow them to negotiate lower prices for consumers. Ultimately, they couldn't prove the efficiencies, said David Dranove, PhD, professor of health industry management at Kellogg School of Management. Hired Anthem witness Mark Israel, PhD, senior managing director at Washington, D.C.-based consulting firm Compass Lexecon, added distinctive to the Anthem-Cigna failure was the "parties were publicly, openly and violently fighting."  

2. The Aetna-Humana merger failed, in part, because of how the court defined relative market. Aviv Nevo, PhD, an economics professor at the University of Pennsylvania in Philadelphia, said Hartford, Conn.-based Aetna and Louisville, Ky.-based Humana fell short on convincing the Justice Department their Medicare Advantage plans compete with original Medicare.

3. A Cigna-Humana merger is on the table. The economists agreed a merger between Cigna and Humana could have a different outcome than the other failed mega-mergers, as Cigna is not a large Medicare Advantage player like Humana and neither payer is very big. While Mr. Nevo said there's a "reasonably good chance that … we will see another attempt" by payers pursuing mergers, Mr. Dranove noted Cigna is entrenched in a legal battle with Anthem over their failed deal, and it's "not clear they'll participate in the near term." 

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