Proposed Health Insurance Mergers Consolidating Control and Reducing Choices

A wave of mergers in the health care field is causing concern among consumer organizations.  The last few years have seen a number of major local consolidations of hospitals across the country as they position themselves to better negotiate with insurers.  Now, the major national for profit insurers are gobbling each other up and may leave just  three large companies controlling almost fifty percent of the beneficiaries in the country, according to a New York Times article on Monday.  If approved, Anthem will take over Cigna.  Aetna will take over Humana.  The other big player is United Health Group.  The impact of these consolidations is unclear and is being debated but most consumers organizations quoted in the Times story say that it is not likely to help consumers who will have fewer choices. Consumer advocates also believe that health insurers will just raise rates and that hospitals will seek further consolidations to increase their bargaining power.

The companies argue that consumers will benefit from the consolidations because efficiencies will lead to savings, which will help keep rates lower.  Advocates are dubious and what is clear now is that health care insurance and services will be controlled by fewer but larger insurers and health systems.  For seniors and the disabled, there will be fewer choices for Medicare Advantage plans and drug plans in the years ahead with fewer companies to offer plans.  There are still many other regional and local providers, many of which are non profits so the market will not be completely taken over by the big national companies.  Seniors and disabled beneficiaries will have to again make intelligent review of the Medicare Advantage plans that remain  and many may lose the companies and plans they – though these particular mergers may not take effect for this fall’s decision time.  The mergers still need federal approval from the Justice Department.

Of course, Medicare still is a fee for service system and most beneficiaries are not in Medicare Advantage managed care plans.  However, these plans are rapidly gaining market share and that shift may well continue in the years ahead as younger seniors used to managed care join Medicare.   While the fee for service system has many advantages, managed care, if done as intended, can help coordinate care and is often more cost effective than buying a Medicare supplemental policy.

I think the most disturbing part of all this is that health care is becoming more and more a business rather than a service with profit margins and mergers becoming more important.   That is all true and the push by the government to promote “accountable care organizations” and other wellness initiatives  is important.  To the consumer, health care remains a service and it is important that we as consumers monitor what is happening and make our voices heard.  We have to insist that state insurance departments regulate rates in the private market.  Recently, many insurers sought huge rate increases.  Fortunately, here in New York, the Department of Financial Services has rejected the size of many of the increases and lowered the requests in the non-Medicare market.  Government regulation of health care to protect the consumer and public interest has to become even stronger.    Even if private companies expand, health care has to be regulated like a public utility because somebody has to represent the consumer.

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I have been a senior advocate for most of my career. I was Executive Director of the New York StateWide Senior Action Council and the New York State Alliance for Retired Americans. In 2007-2010 I was the Director of the New York State Office for the Aging

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