Will Aetna-Prudential Merger Hurt the Patient?

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Even as doctors at the American Medical Association meeting in Chicago debated possible ways -- including unionization -- to regain control of their profession from managed care insurers, the Justice Department on Monday gave the green light to Aetna’s proposed $1 billion acquisition of Prudential Health Care. The deal, which will result in the nation’s biggest managed care company, covering 21 million subscribers -- or one in 11 Americans -- was OK'ed on the condition that Aetna divest itself of its HMO in the Dallas-Fort Worth and Houston markets to maintain competition in those two regions. Consumers and doctors immediately criticized the federal stamp of approval, pointing out that in some areas the deal will result in Aetna’s control of between 30 percent and 60 percent of the market.

"The Justice Department has decided to take the view that the health care business, when it comes to mergers and acquisitions, is just like any other business," says TIME senior business reporter Bernard Baumohl. "That means that the department’s review looks to see whether according to traditional rules a merger will reduce competition or tend to raise prices." The problem, however, is that health care is not like traditional goods or services, such as automobiles or insurance. In medicine, competition and prices are often secondary issues because people seek health care to resolve life-and-death problems. "Consumers and doctors find it instinctively troubling," says Baumohl, "when insurance providers get so big that they can virtually dictate to physicians through clerks the kind of treatment patients can get." The latest merger, and the government’s laissez-faire nod, is not likely to dampen the fear that profit, rather than medicine, is fast becoming America’s yardstick for health care.