I should first acknowledge that I predicted a wave of consolidation in the health care industry as a response to the passing of the Affordable Care Act a few years ago. The fact that I predicted this shouldn’t illustrate any intelligence on my part; rather it shows the obvious true nature of Obamacare. In my opinion, one I share with many commentators, creating tumult in the insurance industry was an intended consequence of the legislation.
Consolidation, indeed, is just gaining momentum. For example, in a recent article in Managed Health Care Executive, author James Burns outlines 5 potential issues raised by the potential merger of Wellpoint and Amerigroup, both large insurers. He explains that the Antitrust Division has made a second request for information on the merger, possibly inferring that they may not allow the deal. He goes on to say, however, that if the merger is allowed, the companies may encounter hurdles at the state level if politicians and regulators fear anticompetitive behavior. The article is informative on the subject, but what I took away from it is something of a wholly different nature. (See this excellent author’s work: http://www.dickinson-wright.com/bdsfiles/News/d2f4dc06-6d34-4858-9f67-06c31bdb6656/Presentation/NewsAttachment/bc6d294b-54f3-4b81-8fe8-2f2019ea2439/MHEBurnsArticle.pdf)
This merger is likely to go through, as will others. It is my contention that the regulators behind enforcement of Obamacare would rather deal with a few behemoth insurers than a slew of smaller ones.
While the insurance industry needs to consolidate to survive the measures enacted in the ACA, this is not a good thing for the average consumer. If competition leads to lowered prices, then the opposite is true of consolidation. From the standpoint of the Federal government however, if there are fewer companies to monitor then law and regulatory enforcement becomes that much easier. Furthermore, from the standpoint of this cynic, it also becomes easier to sway corporate leadership to act on behalf of said government’s interests; they do, after all, hold the most enticing bargaining chip that exists: control of the budgets of the largest payer sources in health care.
This all sounds conspiratorial and I’ll admit that it’s not crystal clear yet, but the pathway is set forth if you’ve read the bill. I hate to end on such a sour note, but I honestly fear that the march toward single-payer has officially begun and that we will, beginning here with insurers, see one domino after another fall in line.
