States charge insurer would dominate markets
Aetna's proposed $1 billion acquisition of Prudential HealthCare, which would form the nation's largest managed care company, has set off a storm of complaints about market domination and triggered a probe by the U.S. Department of Justice.
The merged company would provide health care or dental coverage to approximately 22.4 million people, or one in every ten Americans. More than 18 million of the customers would be covered by managed care products.
The American Medical Association is putting pressure on the Justice department to recognize that the merger would "limit the choices of patients and employers, reduce competition, and further erode the ability of physicians to make medical decisions based on science and the medical needs of their patients, not share price."
With this proposed acquisition, Aetna would become one of the top three insurers in nine states: Florida, Georgia, Maryland, New Jersey, New York, Ohio, Pennsylvania, Texas and Virginia.
Aetna's proposed merger would capture 38 percent of the New Jersey market. "If you put that into perspective, the next two largest payers are Blue Cross/Blue Shield with a 13 percent market share and Oxford Health Plan with a 10 percent market share," says Jerome A. Molitor, MD, Medical Society of New Jersey. Projections of market share by county, are "even more alarming," he says, "resulting in a 59 percent market share to two of six counties and over 40 percent of the market share in others in the state."
The medical society is in discussions with the Federal trade Commission and working with the state's attorney general's office to prevent the merger.
The AMA says Aetna would have 30 percent of the HMO market in Atlanta; 33 percent in Orlando, Fla.; and 41 percent in Texas.
In the Dallas/Fort Worth area, the Aetna would have a 39 percent market share. In Houston, there would be a 46 percent control over the HMO market.
Texas doctors have asked state regulators to force the divestiture of Prudential operations in Dallas and Houston as a condition of approval. No way, says Richard Huber, Aetna chief executive officer. "If somebody wanted us to divest Alaska or someplace like that, that's one thing," he told Texas business men. "But Texas-this is filet mignon."
Doctors are puzzled why the Justice department has been mute about the consolidation of the managed care market, yet it opposes doctor unionization on the grounds that it would be a threat to competition.
The deal must be approved in all the states in which the two insurers operate.