Crossroads of Innovation, Coverage, and Competition

The proposed mergers between Aetna and Humana, Anthem and Cigna, and Centene and Health Net and the impact of such consolidations are discussed. Health economist Austin Frakt made it clear that all health economists feel the same way about consolidation in the healthcare market: it’s not good for consumers.

“There’s unanimity on this issue that when you have consolidation among health insurers or providers, you generally don’t get good results for consumers,” Frakt said. He added that generally the result is higher prices. Sometimes there will be higher quality of care, but not always, and if higher quality is a result, people should be asking, “Is the higher quality worth the higher price?”

Leah Binder added that it’s not just consolidations of payers because there are also a lot of mergers happening at the provider level too. Studies have found that when there is consolidation of hospital system, quality usually goes down and cost goes up even though the mergers always promise the opposite.

Frakt admitted that while it is true that consolidation can lead to greater efficiencies and reduced costs, often the merger doesn’t reduce costs for those who are paying. It is possible that insurance consolidation will offset provider consolidation, but the savings do not normally translate to the premiums consumers are paying, he said.

When the insurers and the providers get so big, we need to be careful that the consumer does not get stuck in the middle, Matt Salo said.

“And all this, it’s all about checks and balances and with insurance companies and hospitals and other providers and payers and the consumer, when you tilt the market with consolidation, you run a real risk of upsetting that set of checks and balances,” Salo said. “I think you need to be real careful.”