138 Annals of Health Law Vol. 25
an effective infrastructure, construct collaborative networks, and advertise the new health plan brand.329 To create an effective health plan, providers must aim to enroll at least 100,000 patient-members to achieve the necessary risk pool.330 Although in theory, cutting out the middleman–-the insurer–- would appear to save money, there is a deep-rooted history between hospitals and insurance companies that make this idea difficult and complicated to achieve.331 “Hospitals cannot flip a switch to go from a provider to an insurer,”332 but the cost and quality benefits that health systems can derive from the new role of an insurer will likely prove to be advantageous.
Since 2010, the ACA sparked unprecedented changes within the health care industry.333 To correspond and comply with the changes, it will be necessary for the industry and its payment system to correspondently focus on shifting the status quo.334 The concern that only a few large companies will act as the minute number of players in the health insurance game is real; however, the concern may become obsolete if health systems continue to enter into the insurance game. As evidenced by the potential outcome of only three main insurers in the United States, the insurance game and the traditional market pressures are already changing.335 The consolidation trend began before the creation of the ACA, but the ACA has become one of the main drivers of the current consolidation trend within the healthcare industry. Although the intentions of the consolidating insurance companies may be questioned, consolidation will lead to larger provider networks with an increased potential in delivering cost-effective and high-quality health care. Even with the potential to achieve the low-cost, high-quality goals of the ACA, the proposed mergers are contingent on FTC approval. The FTC reviews the proposed mergers to
patient care. Id. Provider-sponsored health plans provide a way for providers to reduce waste and administrative overhead. Id. 329. Herman, More Health Systems, supra note 258. 330. Kelly, supra note 311. 331. Rabin, supra note 253; Bob Herman, Why Hospital-Owned Health Plans Are Big Like Cheese in Wisconsin, MODERN HEALTHCARE (Dec. 9, 2015), http://www.modern healthcare.com/article/20151209/NEWS/151209857. 332. Herman, The Risks, supra note 257. 333. See EZEKIEL J. EMANUEL, REINVENTING AMERICAN HEALTH CARE 347 (2014) (“The ACA is stimulating a transformation of the entire American health care system . . . [b]efore the ACA, the American health care system was literally killing the country.”). 334. Herman, The Risks, supra note 257. 335. Kelly, supra note 311 (noting that “the chance to gain market share and cut expenses by eliminating the insurer as the middleman is attracting hospitals again, particularly if the top five U.S. health insurers consolidate into three players); see Part I.