Anthem had some good headlines on Wednesday. The insurer reported second-quarter earnings and revenue that topped estimates, with the latter jumping 7.2 percent from a year earlier. It expects to insure more people than it initially forecast this year, after surprisingly robust growth in its Medicaid business.
But beneath the good, there was also bad and ugly.
S&P Global Ratings has placed Aetna and Humana on creditwatch following the Department of Justice’s announcement Thursday to block their merger.
S&P said it has placed its ratings on Aetna on creditwatch with developing implications, and on Humana and its core subsidiaries on creditwatch with negative implications.
The DOJ also blocked the merger between Anthem and Cigna on Thursday. S&Psaid its ratings on the two insurers would remain on creditwatch negative, where they were placed on June 21, 2015.
Anthem and Aetna have both said they would fight the DOJ’s injunction against their respective mergers in court.
For Anthem’s proposed $53 billion acquisition of Cigna, litigation could be difficult and time-consuming, S&P said.
Seeking regulatory approval for a controversial merger proposal, health insurer Anthem recently pumped $460,000 into groups supporting the election campaigns of governors and state attorneys general. The money was disclosed in second-quarter campaign finance reports reviewed by International Business Times.
Those federal filings, which were released by the Internal Revenue Service late Friday, show Anthem gave $210,000 to the Republican Governors Association, $200,000 to the Democratic Governors Association in the last three months. In many states, the insurance commissioners reviewing the proposed Anthem-Cigna mega-merger are appointed by governors. The cash to state officials is on top of $50,000 Anthem gave to a Democratic-affiliated political group called “Unity Convention 2016.”
The money to the DGA is particularly notable because the group is headed by Connecticut Gov. Dannel Malloy, whose insurance commissioner, Katharine Wade, runs the agency leading the national multistate review of the deal. Anthem money flowed to the DGA in June amid an ethics probe prompted by IBT’s investigative series documenting Wade’s personal and familial ties to Cigna.
Malloy has refused to force Wade to recuse herself from the merger review, at a time when Anthem and Cigna have increased their donations to the DGA, which backed his campaigns and which he has chaired since late 2015. In all, the DGA has raised a total of $1.1 million from Anthem and Cigna since Malloy began the process of nominating Wade to the insurance post in 2015. That sum is 37 percent more than the group raised in the entire 2014 election cycle, and almost half of the total campaign contributions the companies have given the group in the last decade.
The International Federation of Health Plans (iFHP) today released its2015 Comparative Price Report, detailing its annual survey of medical prices per unit. Designed to showcase the variation in healthcare prices around the world, the report examines the price of medical procedures, tests, scans and treatments in seven countries.
The report undercuts the idea of what’s being played out in the recent Sutter Health case which alleges the health system is overcharging insurers causing medical costs to be pushed downstream to patients. Last Friday, the suit was allowed to seek class-action status. Matthew Cantor, partner and attorney at Constantine Cannon and lead lawyer for the plaintiffs, told Healthcare Dive the plaintiffs allege to have contracts which require health plans to purchase all the hospital services that Sutter provides in Northern California.
Sutter is “leveraging its larger power in those markets to say to these health plans that they have to also purchase Sutter Health hospital services elsewhere and not only do they have to purchase them but they have to purchase those Sutter services at higher, super competitive prices,” Cantor said, adding that this, in turn, raises the costs of medical services to health plans. These higher costs, Cantor said, are then sent downstream to insurance policyholders.
“Competition is not working,” Sackville told Healthcare Dive. “The market’s not working because if it was, no one would get away with charging $17,000 [for a day of hospital care].”
The report put a focus on the lack of provider competition and consolidation. There’s been a fair amount of consolidation in various states and more systems are pursuing the idea of mergers or partnerships. Such activity, in theory, could bring down competition in an area and tick up costs for consumers as hospitals’ market power grows. “Powerful hospital systems have the ability to raise the prices of medical care. Health plans have no alternative but to take these forced, higher costs upon them because [if they refused] then no one would buy their insurance,” Cantor told Healthcare Dive.
http://www.newsobserver.com/news/article88050667.html
“This case presents another example of healthcare providers attempting to use state legislation to shield potentially anticompetitive combinations from antitrust enforcement,” the FTC said in a statement Wednesday. “Our decision to dismiss this complaint without prejudice does not necessarily mean that we will do the same in other cases in which a cooperative agreement is sought or approved.”
St. Mary’s has 393 beds and Cabell Huntington has 303 beds. They are 3 miles apart and are the top two private employers in Cabell County, with nearly 5,000 total employees. The combined operation would represent the second-largest hospital chain in the state behind Charleston Area Medical Center.
http://www.beckershospitalreview.com/finance/shuttered-california-hospital-draws-1m-bid.html
Colusa (Calif.) Regional Medical Center has been closed since April, but the hospital has received a takeover offer that may allow it to reopen.
HENRY KOTULA 