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HARRISBURG—The proposed merger of Aetna U.S. Healthcare and Prudential Health Care has come under the regulatory scrutiny of the Pennsylvania Attorney General.
"We are aware of the complaints voiced by the medical community and our antitrust attorneys are looking at this," says Sean P. Connolly, a spokesman for Pennsylvania Attorney General Mike Fisher.
The union of Aetna and Prudential’s health insurance operations would bolster Aetna U.S. Healthcare’s membership to 22.4 million, making it the country’s largest health insurer. Officials at Blue Bell, PA-based Aetna U.S. Healthcare and a leading industry analyst express confidence that the transaction will pass regulatory muster.
"We overlap in many markets in many states, but in no market do we create a dominance when you look at the total number of insured lives," says Arthur N. Leibowitz, MD, Aetna U.S. Healthcare’s chief medical officer.
"In this market, Aetna U.S. Healthcare is big, but Prudential isn’t," he continued. "Prudential is large in Florida, but Aetna U.S. Healthcare is not."
Industry analyst Kenneth S. Abramowitz similarly dismisses many providers’ concerns about the proposed merger based solely on how it would affect the HMO market. Mr. Abramowitz, with the New York investment firm Sanford C. Bernstein, says a more appropriate analysis would look at the market for total covered lives, including persons enrolled in preferred provider organization plans, traditional indemnity coverage products, and many self-funded plans.
Shortly after the deal was announced in December, the 9,500-member Medical Society of New Jersey urged the appropriate state and federal antitrust authorities to review the transaction.
"From a patient perspective, bigger is not necessarily better. While mergers may achieve some economies of scale, New Jersey physicians are concerned that little or no benefits are being passed along to our patients and that medical care will get more impersonal," says David Swee, MD, chairman of the Medical Society’s Council on Medical Services.
Mr. Swee says the Medical Society’s concern regarding the merger does not stem from any past or existing abuses of the system. Rather, the deal creates the "potential to abuse," he says.
In December the American Medical Association asked the U.S. Justice Department to challenge the deal, calling the proposed merger anticompetitive.
"The market power that would be created or exacerbated by this 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," stated AMA executive vice president E. Ratcliffe Anderson Jr., MD, in a letter to Joel I. Klein, head of the department’s antitrust division.
—Philadelphia Business Journal, Feb. 8. See State Health Watch story on state oversight of health plan mergers, February 1999, p. 7.