Obama Administrations May Block Health Insurance Company Mergers

The American Justice Department antitrust chief Christine Varney has warned anti-monopoly laws must be enforced vigorously to control rising premiums following the passage of new health care law. Varney has warned that the Obama administration will not waver in blocking merges that threaten to diminish competition. Indeed, a recent merger in Michigan that would have seen the state’s two largest firms merge to enjoy a 90 per cent market share was recently blocked.

Large insurance companies in the US have grown steadily larger in recent years, to the point that in some states, one or two insurers enjoy a majority of the market share. While insurers insist that the mergers are legitimate in helping them to make savings, consumer groups and doctors have hit out at the trend, claiming the mergers inhibit competition and allow insurers to increase costs. Insurance companies have instead cited doctors and hospitals as responsible for increased medical costs .

With health insurance set to become compulsory in America following the passage of recent health care legislation, a number of concerns have been raised at how these laws can be implemented, while there have also been fears that consumers may be susceptible to private medical insurance scams.