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Insurance CEOs again called before lawmakers

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Top health insurance executives are making the rounds these days in Washington.

Last week, CEOs from Aetna and Anthem – who are each looking to complete mega-mergers – testified before the Senate, and the two return again Tuesday for a hearing in the House.

Lawmakers have pressed the executives to detail how consumers will benefit from these potential deals.

When the companies announced their respective mergers, each promised efficiencies and reduced costs, and last week Senator Al Franken (D-Minn.) asked Aetna’s Mark Bertolini whether he would commit to passing those savings on to policyholders.

“It is our intention to make our products more affordable. And we commit to continue to drive affordability across the system in the changing relationship with providers,” said Bertolini.

When Franken said that didn’t address his question, Bertolini managed an “Okay.”

Instead of the explicit promise Franken sought, the executives hinted that as bigger companies they could negotiate better rates with hospitals and doctors.  

They said the deals would make it easier to pay providers for quality rather than the volume, another way they hope to control costs.

Leemore Dafny with the Kellogg School of Management at Northwestern says whatever insurers promise on Capitol Hill doesn’t mean too much.

“It’s not pledges that we want, it’s competition that we want to ensure that savings are passed through if they are realized,” she says.

In other words, if the Justice Department believes these mergers don’t violate antitrust law, there may be less competition.

And without competition, Dafny says companies have less reason to lower premiums. 

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