The market concentration threatened by the pending insurance deals is large and durable, and consumers and providers are at risk if the deals are allowed to move forward. The two deals [Anthem/Cigna and Aetna/Humana] promise fewer choices for consumers for commercial insurance and Medicare Advantage (MA) plans, narrower networks of providers in what few choices remain, and higher premiums and/or out-of- pocket costs, among other things. Even if these insurers make good on their promise to reduce costs if they are permitted to consolidate, insurers have a dismal track record of passing any of those benefits on to consumers . . . 53
Along with these apprehensions about insurer consolidation, a study conducted in the first part of 2015 found that the cheapest provider-owned health plans sold on ACA marketplaces were 12 percent more expensive than the cheapest plans not owned by providers. 54 Other studies of health organizational consolidation55 and physician practice competition56 appear to support the hypothesis that connects reduced competition among providers to higher prices and expenditures. Competition and quality are related. “Understanding the relation between competition and quality is a central issue in economics in general. Economists are interested in understanding the optimal level of competition in a market. Moreover, the link between competition and quality is central in
53. State of Competition in the Health Care Marketplace: The Patient Protection and Affordable Care Act’s Impact on Competition: Hearing Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary 114th Cong. 34 (2015) (statement of Richard J. Pollack, President, American Hospital Association), https://judiciary.house.gov/wp-content/uploads/2016/02/114-46_96053.pdf; see also, U.S. GOV’T. ACCOUNTABILITY OFFICE, GAO-15-710, MEDICARE ADVANTAGE: ACTIONS NEEDED TO ENHANCE CMS OVERSIGHT OF PROVIDER NETWORK ADEQUACY (2015), http://www.gao.gov /assets/680/672236.pdf. But see State of Competition in the Health Care Marketplace: The Patient Protection and Affordable Care Act’s Impact on Competition: Hearing Before the Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. Comm. on the Judiciary, 114th Cong. 21-23 (2015) (statement of Daniel Durham, Executive Vice President, Strategic Initiatives, America’s Health Insurance Plans) (contending that consolidation of health insurers may foster pro-competitive effects). 54. Kev Coleman & Jesse Geneson, Cheapest Healthcare Provider-Owned Insurance Plans Still 12% More Expensive than Cheapest Insurance Plans not Owned by Providers, HEALTH POCKET (Aug. 20, 2015), https://www.healthpocket.com/healthcare- research/infostat/fee-for-service-and-provider-health-plans. 55. James C. Robinson & Kelly Miller, Total Expenditures per Patient in Hospital-Owned and Physician-Owned Physician Organizations in California, 312 JAMA 1663, 1663-69 (2014). 56. Laurence C. Baker et al., Physician Practice Competition and Prices Paid by Private Insurers for Office Visits, 312 JAMA 1653, 1653-62 (2014).