Do 3 big insurers flash red for govt? Mergers get close look
That's how many big companies could remain after the proposed combinations of Anthem with
At only three companies, "The agencies' ears tend to perk up," said
In this case, the
The question is whether the mergers would hurt competition and consumers, making the companies so dominant that they could push already high health-care costs even higher.
"This will be a very lengthy and complicated process," said
Health care is one of three major industries — along with food and energy — that are especially important to the economy and consumers, and so they receive a careful review from regulators, he said.
"I think the government's going to be extremely cautious about reducing the number of major health care carriers down to three," Bell suggested. "I would be very surprised if both mergers were permitted to go through."
The proposed deals also are likely to draw the attention of state attorneys general, he said.
Among the factors the government likely will examine:
—What does competition look like in the markets — in states and for different insurance products — where the companies now operate, and how might that change after the mergers?
—How easy is it for new competitors to enter those markets? If the number of big companies is reduced, would new ones come in to fill the gap?
— What is the impact of the health-care overhaul law on competition in the industry?
The picture is complicated by the fact that the insurance industry is regulated by states, not the federal government. States decide how insurers can conduct business and what new companies can enter the market.
Some states have a very competitive environment for health insurance while in others a few companies dominate the market, said
For the government regulators, "There's kind of a balancing act that needs to be struck," O'Brien said.
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