The increasing consolidation among health insurance companies as a result of the Affordable Care Act will eventually lead to either a monopoly or a government-run, single-payer system, industry commenters are saying.
Writing in the Baltimore Sun, Robert Reich suggests while merger and acquisition activity may be good for the shareholders of America’s leading health insurers, it will be “bad for the rest of us, who will pay through the nose for the health insurance we need.”
He points to the 1999 merger of Aetna with Prudential HealthCare, in which premiums rose 7% higher than they would have if the merger hadn’t occurred, according to a study from the Kellogg School of Management at Northwestern University.
“If we continue in the direction we’re headed, we’ll soon have a health insurance system dominated by two or three mammoth for-profit corporations capable of squeezing employees and consumers for all they’re worth – and handing over the profits to their shareholders and executives,” Reich said.
“The alternative is a government-run, single-payer system – such as is in place in almost every other advanced economy – dedicated to lower premiums and better care.”
Not all insurance industry observers take Reich’s view, however. Peter Ubel, a professor of business, public policy and medicine at Duke University, says the merger between Aetna and Humana this month will give insurers the bargaining power necessary to control the high costs being leveled against consumers by drug companies, healthcare providers and medical-device makers.
“This grows the strength of the payer, and that’s very important when negotiating with the providers,” Ubel told MarketWatch. “This will probably help hold down the cost of medical care.”
Along with the $37 billion Aetna-Humana merger, reports are circulating on a possible buyout by UnitedHealth Group of a smaller competitor. Aetna has also made headlines by going public with a bid to takeover Cigna Corp.
If any of the deals currently being proposed go through, analysts say it would result in an industry topped by three dominant carriers – each earning more than $100 billion in annual revenue.
