AMA Wants DOJ, FTC to Modernize Antitrust Laws for Mergers

The AMA is worried that without enough competition in the space, health insurer monopsonists won't have any incentives to pass savings on to their consumers.

The American Medical Association is urging the Department of Justice and the Federal Trade Commission to take a hard look at the current federal guidelines that govern mergers, as the organization believes the current framework for analyzing M&A activity that could reduce competition in labor markets is insufficient.

"The AMA has long understood that competition in health insurance, not consolidation, is the right prescription for health insurer markets," the letter reads. … "Mergers of competing buyers in labor markets, such as the markets in which physicians sell services to health insurers, receive short shrift in the existing Merger Guidelines. Merely one page is devoted to monopsony, and there is no discussion of monopsony issues in labor markets."

The AMA is worried that without enough competition in the space, health insurer monopsonists won't have incentives to pass savings on to their consumers. The AMA says it can point to only one instance in which the government came close to successfully litigating monopsony concerns: the 2015 merger of Anthem and Cigna.  

"The DOJ decided to make a monopsony claim that the merger of Anthem and Cigna would harm physician markets," the AMA letter states. "While Anthem was ultimately decided based on the merger's effects in the markets for the sale of health insurance, monopsony concerns in physician labor markets were heavily litigated. Lessons from that singular experience should make their way into the Guidelines and other statements of federal antitrust merger policy."

The AMA says more focused guidance on monopsony concerns will increase competition, resulting in lower premiums, and force insurers to improve customer service, pay bills in an accurate and timely manner, and provide the opportunity to develop new ways to improve quality and reduce costs.

"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."