John Oxendine

John Oxendine

The giant health insurance mergers now on the table would reduce the number of major national insurers from five to three.

John Oxendine, Georgia’s former insurance commissioner, believes that a Big Three is not enough for a competitive balance.

“Three is not competitive,’’ Oxendine told GHN last week in an interview. “My personal opinion is that it would be very bad for consumers.”

The two deals – Aetna buying Humana and Anthem buying Cigna – were each announced in July. The former would double Aetna’s size in Georgia, while the latter would add to Blue Cross and Blue Shield of Georgia’s big membership lead over other insurers in the state. Anthem is Blue Cross’ parent company.

If both deals ultimately are approved by regulators and shareholders, the two combined companies, Aetna and Anthem, would be part of the new Big Three, with UnitedHealthcare being the other giant national player.

Oxendine, of Gwinnett County, served four elected terms as the state’s insurance commissioner, from 1995 to 2011. In 2010 he declined to run for re-election and sought the governorship instead, but he lost in the Republican primary. Ralph Hudgens, also a Republican, succeeded him as insurance commissioner in 2011 and is now in his second term.

Oxendine says he believes commissioners in every state “should be extremely concerned” about the two mergers. They should look at both deals in tandem, not separately, he added.

“Prices are already going up’’ under the Affordable Care Act, he said.

Insurers have been pursuing such big deals in order to cut costs and increase their clout in negotiations with medical providers and for better pricing on pharmaceuticals.

While in office, Oxendine approved WellPoint’s acquisition of the parent firm of Blue Cross and Blue Shield of Georgia, which was completed in 2001, and Aetna’s purchase of Prudential, finalized in 1999. But he says the current contemplated mergers are much different.

The WellPoint deal, Oxendine said, did not affect competition because WellPoint had no operations in Georgia at the time. And Prudential was a small health insurer in Georgia when Aetna bought it, he said.

The quest to diversify

Oxendine said he has not talked with Hudgens about the upcoming state reviews of the two deals.

A spokeswoman for Hudgens, meanwhile, told GHN that he will have the same process for each merger – including a department review and public hearings – but that they will be done separately.

The leader of the Georgia Association of Health Plans defended the insurers’ moves, saying that they will go through much tougher scrutiny than mergers between hospitals.

“He [Oxendine] should have the same point of view with hospital mergers,’’ said Graham Thompson, executive director of the insurer trade group.

Graham Thompson

Aetna and Anthem are looking to diversify their portfolios of insurance offerings in their respective deals, he said. “They’re trying to become more well-rounded.”

On the competition issue, Thompson noted that Georgia consumers had choices of four insurers in the health insurance exchange created by the ACA. “You may not have four choices of hospitals, or which imaging center or lab you go to.”

Health insurers are now under federal restrictions that they must spend at least 80 percent of their premium dollars on medical care and quality improvements. “It’s a much different game,” Thompson said. “We submit our rates well in advance. Hospitals can charge more, as can physician groups.”

The consumer group Georgians for a Healthy Future says it wants to have input in the insurance merger reviews.

Consolidation “is happening really fast across the industry,’’ said Cindy Zeldin, executive director of the group. “We want to be engaged in this. It will have a big impact on consumers.”

Oxendine, who returned to the practice of law after serving as commissioner, has been prominent in other health care news recently.

On behalf of a number of clients, he recently filed a lawsuit against Blue Cross and Blue Shield of Georgia that argues the insurer fraudulently continued to charge high premiums to customers while at the same time cutting payments to out-of-network medical providers, according to an AJC article by James Salzer.

Oxendine said Blue Cross justified the higher premiums by telling customers they could be treated by higher-paid, out-of-network providers, the article stated.

Blue Cross said the charges are unfounded and that providers were adequately compensated, the AJC reported.