Scrutinizing Aetna-Humana Deal

aetna-humana-merger
by David Gorn, California Healthline, Tuesday, January 5, 2016

On Monday, the director of the state Department of Managed Health Care vowed to take a close look at the proposed acquisition of Humana by Aetna.

At a public hearing on Monday in Sacramento, DMHC Director Shelley Rouillard said Aetna’s record of premium rate hikes could figure prominently in the decision to approve or reject the health insurance deal.

“Aetna has had a history of moving forward with premium rate increases the department has found to be unreasonable or unjustified,” Rouillard said at the hearing.

She said Aetna’s small-group insurance products accounted for two-thirds of all premium rate hikes found by DMHC to be unreasonable. And when the department deemed those rates unreasonable, Aetna made those increases anyway, Rouillard said.

“Issues around access and quality and past performance are all things we’re going to be taking into account and considering,” Rouillard said.

No decision was made at the hearing and Rouillard did not say when one would be issued.

Rouillard definitely had consumer interests in mind, as Monday’s meeting was the third of four hearings to consider four different mergers of health insurance companies.

“This department is committed to transparency and stakeholder engagement and … our job is to ensure strong consumer protections,” Rouillard said. “I have concerns about the impact of these mergers on premium rate increases.”

Francis Soistman, head of government services at Aetna, said the opposite would occur if the merger was approved — premiums would likely decline because of it, he said.

“We’re looking at about $1.35 million in savings the first year, and continued savings [over the following years],” Soistman said. “Consumers will see lower overall costs, and those savings will improve consumers’ experience.”

As for the concern over Aetna’s history of premium hikes: “Rate increases are difficult,” Soistman said, “and we don’t take them lightly.”

Mark El-Tawil, vice president for Humana’s Medicare, West Division, said Humana has instituted some innovative practices with Medicare Advantage customers that has shown good results — including a 30% drop in hospital readmission rates with the Humana at Home program.

“We are committed to enhancing health care across the state,” El-Tawil said. “We wanted to develop a more holistic approach to their health … to make sure they get the care they need.”

Tam Ma, policy counsel for Health Access California, spoke during the public comment period of Monday’s hearing.

“Our main concern is whether consumers will be better off [with this deal],” Ma said. “It’s not clear how much they can benefit from economies of scale,” she said, when Aetna already is so big.

“And Aetna’s track record reflects a lack of concern for the law in California,” Ma said. For instance, she said, Aetna has made it difficult for patients to submit a grievance. “There’s a question if Aetna should be allowed to get bigger,” she said, “if it … can’t handle patient grievances.”

But the most important issue to Ma was Aetna’s big hikes in premium rates.

“We don’t trust Aetna to pass along cost savings to consumers when they’ve raised rates unreasonably,” Ma said.

A final decision will be posted on the DMHC website, Rouillard said.

Source: California Healthline, Tuesday, January 5, 2016