Insurance mergers: Weddings mean funeral for health care

Merging insurance companies could be a disaster for U.S. health care.

Welcome to Unholy Matrimony: Healthcare Edition. Insurance giant Aetna has made an offer to combine with Humana, and Anthem has bid to buy Cigna. If regulators allow these multibillion-dollar deals to go through, three corporate behemoths will dominate the insurance market.

This concentration of market power would be a disaster, immediately reducing the choices available to consumers and undermining competition. Americans will suffer from more-expensive, lower-quality health care. Worse, a health-care sector controlled by a tiny number of huge insurance companies could lead to calls for a government-run, single-payer system.

To protect consumers, regulators at the Federal Trade Commission and the U.S. Department of Justice should block the mergers.

In a free market, companies compete to attract consumers by offering the best possible service at the lowest price. A lack of competition allows companies to get away with inferior service and price gouging.

Insurers know that eliminating competition through mergers will enable them to charge higher premiums and provide less-extensive coverage.

Many consumers already lack significant health-insurance options. Seventy-two percent of urban areas have “highly concentrated” health-insurance markets, according to a study by the American Medical Association. In 41 percent of urban areas — and in 17 states — a single insurer controls at least half the market. In all but five states, the top two insurers control at least 50 percent of the market. The mergers would make this unfavorable situation much worse.

Mega-insurers will also diminish the quality of health care by lowering reimbursement rates for doctors and hospitals. Insurers will bully providers into accepting these lower rates by threatening to cut them out of covered networks.

Since out-of-network care is prohibitively expensive, many patients will have to stop seeing the doctors they’ve had for years. And doctors and hospitals will compensate for the lower rates by raising their own prices.

The mergers’ short-term effects on consumers will be nasty. But the impact on the health-care system as a whole is even worse. As the number of insurers dwindles and their prices increase — and with the government already subsidizing many Americans’ insurance through Obamacare — it’s only a matter of time before the left pushes to “cut out the middle man” and impose a single-payer health-care system, where government is the only insurer.

Democratic presidential hopeful Bernie Sanders has already called for such a system. “I do believe that we have to move toward a Medicare-for-all, single-payer system,” he recently noted. That will cost an estimated $15 trillion. Even Donald Trump, the current frontrunner for the Republican presidential nomination, has praised single-payer. “It works in Canada. It works incredibly well in Scotland,” he noted at the first GOP debate.

Not so fast. To see what a single-payer system would look like, and how it would affect patients, just look north of the border.

In Canada, wait times are shocking. It can take a month and a half to see a specialist. Canadians wait up to three times as long as Americans in emergency departments.

Canadians “aren’t happy with their ability to access care in a timely and coordinated way” and often must visit the emergency room for care that could be provided elsewhere, according to a Health Council of Canada report that compared care in Canada to 10 other advanced countries, including the United States.

In fact, Canada’s health-care system ranked dead last for the accessibility of care on evenings, weekends and holidays. Canadians also had a tougher time than patients from any other country getting an appointment the same day or the next day — that is, when they’re actually sick and need care.

Single payer isn’t such a good decision, eh? It’s no wonder that 52,000 Canadians left the country in 2014 to seek medical care.

Without competition in the insurance marketplace, American health care would decline in quality and increase in cost. Liberal policymakers would inevitably respond by pushing for single payer — or Medicare-for-all. This isn’t a future anyone should want for America. To prevent it, regulators should nix the anti-competitive insurance mergers.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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