(Bloomberg) -- The market for health insurance in the U.S. is already so highly concentrated that pending tie-ups among four of the country’s largest insurers risk hurting both consumers and doctors, the American Medical Association said.

Anthem Inc.’s proposed takeover of Cigna Corp. and Aetna Inc.’s bid for Humana Inc. would reduce competition among insurers in 154 metropolitan areas, worsening already concentrated markets, the organization said in studies released Tuesday. The mergers could cause premiums to go up and decrease payments to doctors, the AMA said.

"The prospect of reducing five national health insurance carriers to just three should be viewed in the context of the unprecedented lack of competition that already exists in most health insurance markets," the AMA said.

‘Limited Overlap’

The takeover would make Anthem the largest health insurer in the U.S. by members and give it more scale in commercial coverage.

Anthem and Cigna have "limited overlap in a highly competitive industry," said Kristin Binns, a spokeswoman for Anthem. By combining, they will be able to operate more efficiently and reduce costs, she said.

"Our commitment to ensuring that consumers have expanded access to high-quality, affordable health coverage is the foundation of the proposed transaction and will remain Anthem’s top priority," Binns said.

Spokesmen for Aetna, Cigna and Humana didn’t respond to requests seeking comment.

Assistant Attorney General Bill Baer, who leads the Justice Department’s antitrust division, which is reviewing the surge of deals, has said he will assess the industry as a whole to make sure competition is preserved and the mergers don’t lead to higher costs.

Antitrust reviews of health-insurer deals typically focus on competition in local markets. In the past, companies have been able to resolve government concerns by selling parts of their business to competing insurers. If the Justice Department changes its approach to insurer reviews and considers a national market for health insurance, that could pose a bigger risk for the transactions, according to Bloomberg Intelligence analyst Jennifer Rie.

HHI Index

The AMA study relied on the Herfindahl-Hirschman Index, which is also used by antitrust authorities reviewing deals. The HHI gauges the number of competitors and their market dominance. Markets that fall between 1,500 and 2,500 points are seen as moderately concentrated, while markets in which the HHI is above 2,500 points are considered highly concentrated.

Transactions that increase the HHI by more than 200 points in highly concentrated markets are presumed likely to enhance market power under merger guidelines issued by antitrust authorities.

Anthem’s $48 billion purchase of Cigna, which is based near Hartford in Bloomfield, Connecticut, would enhance market power of the combined firm in 85 metropolitan areas in 13 states, including California, New York, Ohio and Connecticut, according to the AMA study. In Anthem’s hometown of Indianapolis, for example, the change in HHI would be 2,417, while in Hartford, Connecticut, it would be 1,357. An analysis of statewide concentration shows the deal would increase market power in 10 states.

Different Deal

Aetna, based in Hartford, says its deal is different from Anthem’s because of Humana’s large presence in Medicare Advantage, the privately administered version of the government- insurance program for the elderly and disabled, which operates differently from the commercial health-care market.

That deal would increase market power in 15 metropolitan areas in 7 states, including Florida, Illinois and Texas, the AMA said. Among cities that would see the largest changes in HHI are Macon, Georgia; Springfield, Ohio; and Louisville, Kentucky, the study showed.

America’s Health Insurance Plans, which represents the health-insurance industry, criticized the AMA study, saying the group is "recycling misleading data" and blaming health-care providers for driving up costs for consumers.

"Families and employers in every state have multiple choices of both insurance plans and types of coverage," AHIP said.

Antitrust Laws

In addition to AMA, the pair of deals has drawn scrutiny from the American Hospital Association and lawmakers in Washington, who are planning hearings to examine the tie-ups. The hospital association says the transactions would harm millions of consumers and probably will reduce competition in violation of federal antitrust laws.

--With assistance from Zachary Tracer in New York.

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