For Immediate Release
(202) 224-5653

KOHL CALLS FOR GAO INVESTIGATION ON IMPACT OF CONSOLIDATION ON RISING HEALTH INSURANCE PRICES

WASHINGTON, DC – Today, US Senator Herb Kohl called on the Government Accountability Office to investigate the impact of consolidation in the health insurance industry on rising consumer premium prices.  Senator Kohl, Chairman of the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights, submitted the request to the GAO in a letter following the panel's hearing today on the merger of Pennsylvania's two largest health insurers, Highmark and Independence Blue Cross, and health insurance market consolidation.

 

"It is vital we understand how consolidation in the health insurance industry is affecting rising costs for consumers who have no choice but to pay higher premiums," Kohl said.  "Allowing high levels of concentration among insurers may also negatively impact the quality of health care available and make it more difficult for small businesses to offer health insurance to their employees."

 

"An investigation by the GAO will shed light on the consequences of health insurance consolidation and point to the steps needed to be taken to address this situation."

 

At the hearing, Senator Kohl stated his concerns that, in the specific case of the Pennsylvania companies' merger, it would increase their combined market share above 70 percent.  Allowing a single health insurer to gain such a high market share in Pennsylvania raises significant competition concerns for the citizens of that commonwealth.  The Senator also addressed wider concerns about the health insurance competition across the country as consumers face ever increasing premiums, and physicians and hospitals complain of declining reimbursement and 'take it or leave it' contracts that negatively affect patient care. 

 

Statistics point to substantial evidence of rising consolidation in an already highly concentrated health insurance market.  In 299 of the 313 metropolitan areas studied by the American Medical Association last year, health insurance was a highly concentrated industry under Justice Department guidelines.  Since 2000, the number of health insurers nationwide has fallen by 20 percent.  The AMA study found insurance rates were 12 percent lower in states with more competitive choices.  The problems of increasing concentration are compounded by the reluctance of the Justice Department to enforce the antitrust law in this industry.  According to the 2007 AMA study, in the last 12 years, out of 400 health insurance mergers, the Justice Department challenged only two.

 

# # #