Health and Medical News and Resources

General interest items edited by Janice Flahiff

Beware of hype about how consumers will benefit when health insurers merge [Reblog]

From the 27 July 2015 blog of the Association of Healthcare Journalists

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Earlier this month, Thomas Greaney explained the antitrust issuescomprehensively in Health Affairs. “Because each market is local, antitrust analysis would also require an assessment of the competitive overlap in each region,” he wrote. Greaney, is the Chester A. Myers Professor of Law and director of the Center for Health Law Studies at Saint Louis University School of Law.

There is no evidence that insurance or provider monopolies are good for consumers, he wrote, citing Boston and Pittsburgh as evidence that big is not necessarily better in health care or health insurance.

For a good review of the regulatory hurdles insurers face, see this thorough analysisi*** in The New York Times by Robert Cyran. Regulators are concerned about how reduced competition may drive up prices, he explained, writing, “Insurance markets are highly concentrated, and big mergers will make them even more so.”

***Excerpt from The New York Times article
“What’s more, the argument that a big merger would create competition for an even heftier rival has already failed in other industries. In 2011, for example, Sprint, the third-largest cellphone service provider at the time, defended its plan to buy T-Mobile US, the fourth-largest, as necessary to keep its rivals Verizon and AT&T in check. The Federal Communications Commission and the Justice Department rejected the contention, making clear that shrinking the market to fewer than two nationwide carriers would harm consumers.”

So what might persuade the regulators?

The Affordable Care Act could be the answer. President Obama’s health care overhaul creates online exchanges for buying coverage, allowing insurers to expand into new markets without hiring expensive agents. The companies will still need the approval of state commissioners, but the lower barriers to entry should stir more competition – and, at least in the future, appease regulatory fears. It’s unclear whether that would be enough to counterbalance concerns over the top five insurers’ currently chunky market shares.”

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July 28, 2015 - Posted by | health care | , , ,

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