consumers—approaching or reaching monopoly47 or oligopoly48 conditions—generally translates into less or non-existent choice for those consumers. This comes as a result of the unavailability of alternative providers of goods and services and the likelihood of organizations steering consumers toward particular service or product providers in whom the steering organization itself has a financial or other type of interest. 49 For example, “Monopolies tend to keep their prices and profits high by restricting the supply of a good.” 50 As a result, monopolies often leave consumers in a regime of lower quality products at higher prices. 51 Consumer advocates have voiced concerns that consolidation among health insurers will result in higher premiums. 52 The American Hospital Association recently
47. “ A monopoly exists when one firm is the only seller of a good or service.” BUCHHOLZ, supra note 43, at 80. A monopoly is the reverse of a monopsony, a market situation in which the product or service of several sellers is sought by only one buyer. 48. See Letter from Reid B. Blackwelder, Board Chair, American Academy of Family Physicians, to Congressional Leaders (July 27, 2015), http://www.aafp.org/dam /AAFP/documents/advocacy/legal/antitrust/LT-CON-Consolidation-072715.pdf [hereinafter Blackwelder 1]; see also Letter from Reid B. Blackwelder, Board Chair, American Academy of Family Physicians, to Hon. William J. Baer, Assistant Att’y General (July 28, 2015), http://www.aafp.org/dam/AAFP/documents/advocacy/ legal/antitrust/LT-DOJ-Consolidation-072715.pdf [hereinafter Blackwelder 2]. The American Academy of Family Physicians referenced a 2014 report from the American Medical Association to support their efforts: “Competition in Health Insurance: A Comprehensive Study of U.S. Markets” found that a single health insurer had a commercial market share of 50 percent or more in 17 states. Furthermore, the report found that in 45 states, two health insurers had a combined commercial market share of 50 percent or more. In our opinion, these numbers suggest that a lack of competition clearly exists today and speaks loudly against any further consolidation in the health insurance industry. Blackwelder 2. 49. The practice of organizational steering of consumers toward particular providers may raise serious antitrust concerns, but analysis of those issues is beyond the scope of this article. See John J. Miles, § 14. 12 Diversification and Section 2 of the Sherman Act—Steering as Predatory Conduct, 2 HEALTH CARE & ANTITRUST L. (2015). 50. BUCHHOLZ, supra note 43, at 80; see also RICHARD A. EPSTEIN, OVERDOSE: HOW EXCESSIVE GOVERNMENT REGULATION STIFLES PHARMACEUTICAL INNOVATION 45 (2006) (“Under classical economic theory, the single monopolist raises price and cuts output in order to maximize his private gains; in so doing he reduces overall social welfare.”). 51. See RICHARD A. EPSTEIN, supra note 50, at 80 (“It bears stating one more time that the adverse effects of any system of price controls are not only felt by pharmaceutical houses, their shareholders, employees, and suppliers. It is born in part by the public which will see the supply of new products dry up.”). 52. Abelson, supra note 37 (explaining that to be competitive, plans must offer affordable premiums); Leemore S. Dafny, Evaluating the Impact of Health Insurance Industry Consolidation: Learning from Experience, COMMONWEALTH FUND 4-6 (Nov. 2015), http://www.commonwealthfund.org/~/media/files/publications/issue-brief/2015/nov/1845_ dafny_impact_hlt_ins_industry_consolidation_ib.pdf (“the premium increase was not limited to the merging insurers; rival insurers raised premiums as well (in areas where the merging firms had substantial overlap).”).