Antitrust Issues in our Health Insurance Industry Are Real
There are systemic issues in the delivery of health insurance that employers provide to their most valuable resource, their employees. Most employees are reliant on the benefit option plans being offered by his or her company, which is the most affordable way to elect into health benefits.
Many of you reading this have recently received notification that Blue Cross Blue Shield (BCBS) is in the process of settling a 2020 antitrust litigation for $2.7 billion. BCBS was accused of restricting competition by limiting how its member companies competed against each other. The complaint is that BCBS used its structure to suppress competition and keep premiums artificially high.
I always like to remind everyone that since 1985, United Healthcare’s stock price has been up 200,000%. The good news—insert tongue in cheek—is that BCBS is a “nonprofit, not for profit” health insurance provider.
There are only two other health insurance companies remaining, CIGNA and Aetna, which are now a part of CVS Health. Humana stopped writing commercial health insurance in 2023. Currently, there are now only four carriers offering their respective health networks.
The “4 Horsemen” left standing.
Back to antitrust, in 2017, the federal courts blocked mergers of Aetna-Humana as well as BCBS-CIGNA. Both mergers were deemed anti-competitive.
There are many issues that keep us at Providence Benefit Solutions (PBS) on our toes, working on behalf of our employer groups and their employees. We are constantly looking for ways to beat the “4 Horsemen” at their collective game. It is not easy, but we can and do win for our clients.
We can quote health insurance for any company for January 1st as well as June 1st effective dates. The difference is that June will have a 6% higher premium. The carriers call this “trend increase”. As far as PBS is aware, there is no other industry that sets its price increase at 12% annually. This practice has been going on for decades.
Let me give you a real example of a local Tampa Heating and Air Conditioning company with 60 employees. They had been with United for 15 straight years. We requested the opportunity to compete for the business. Their rates were absurdly too high, and the benefits were a watered-down mess that barely qualified as health coverage. We delivered a 40% rate reduction with better, more comprehensive plans from Aetna. Their broker at the time was left to scramble and went to United’s other division and received a rate match – a 40% reduction.
Aetna now understood that United knew the risk, thus lowered the rates another 10% for a total of 50% decease. Carriers like United previously considered this cannibalizing their own block of business. HOWEVER, recall that there is that pesky BCBS $2.7 billion settlement paving the way for some real religion by United and other carriers.
If you would like to have a second opinion, it would be our privilege to advocate on your behalf of and your employees.
