Bill Aims to Protect Consumers Amid Health Care Mergers

This week, the Senate Health Committee will hear S.B. 932 (Hernandez). The bill would require state regulators to scrutinize proposed health industry consolidations to ensure that they are in the interest of consumers. The public would have opportunities to offer comment and feedback on the deals. The bill would prevent hospitals from making anti-competitive demands when negotiating with health plans and insurers. Hospitals, especially those with a large market share, would not be allowed to insist on contract provisions that result in them being the only option for care.

This bill has been introduced in the midst of a wave of pending health care mergers in California. Two of four major health insurance mergers have been finalized: Blue Shield of California acquired Care1st last year, and Centene’s proposal to acquire Health Net was approved with conditions by state regulators last month. Two other health insurance mergers are still pending, Aetna-Humana and Anthem-Cigna. Other hospital and health mergers have also taken place, including the Daughters of Charity Health System purchase by an investment firm in 2015.

Anthony Wright, executive director of Health Access California said, “Health industry mergers have led to price increases, less choice, and greater consolidation. Companies…almost always say that the merger will lead to efficiencies and savings, but they rarely…pass those [savings] to consumers, if [the savings] ever actually materialize. Companies that want to merge need to show that the merger causes no harm to consumers, and that consumers will actually benefit. Some of these health mergers are required to face public hearings and scrutiny while others fly under the radar. It’s time to set a clear standard of…oversight for all these deals that have such a profound impact on the health system.”

Last Updated 11/13/2019

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