Major deals in the health insurance sector continue to dominate headlines. This summer, Aetna successfully acquired Humana and Anthem proposed a billion-dollar merger with Cigna – the top five health insurers in the US are now set to become the top three.
With the transactions have come a series of concerns over lack of competition in the industry and consequently higher health insurance prices for consumers.
But that isn’t a done deal, some analysts have said.
Writing in an opinion article for the
Wall Street Journal, health industry economist Victor Fuchs and Covered California Executive Director Peter Lee say larger insurance companies will have the power to check healthcare providers and potential drive down prices.
Already, large hospitals have begun to merge. According to report from
Kaufman, Hall & Associates, the number of mergers and acquisitions among such entities increased 44% between 2010 and 2014. With so few options for care, large hospitals essentially dictate the cost of medical treatment and – consequently – insurance policies.
That’s where insurers with a sizable market dominance can step in, Fuchs and Lee say.
“Insurance companies can act as a counterweight, and lower prices will get passed along to consumers instead of increasing insurance company profits,” the two said. “That’s because the Affordable Care Act requires insurers to spend at least 80% to 85% of every premium dollar on consumer medical claims and activities that improve the quality of care.”
Similarly, health insurance companies are now required to accept all patients and insurance is “no longer about avoiding sick people.”
All of this means health plans now compete on price and provider availability, rather than on differences in deductibles, copayments and other aspects of plans the opinion authors say are largely incomprehensible to consumers.
With that leverage, health insurers can change how healthcare is valued and paid for.
“Many insurers are organizing or contracting with Accountable Care Organizations that provide care for a defined population for a fixed annual fee, or with penalties and rewards linked to the quality and cost of care provided,” Lee and Fuchs wrote. “This is one example of how those who pay for healthcare can join with Medicare in the move from a healthcare system that rewards volume to one that rewards value.”
