Monopolies aren’t the only threats to competition. When a large industry like cable, wireless, media, banking, or health care merges down to a few dominant players we all suffer the consequences of constrained competition.
A wave of mergers in many sectors of the economy over the last several decades has significantly reduced competition and hurt consumers. That’s why the lawsuits filed last week by the Department of Justice and state attorneys general in federal court challenging two big heath insurance mergers were so important.
Antitrust officials say Aetna’s $37 billion acquisition of Humana and Anthem’s $54 billion purchase of Cigna will reduce the number of large national health insurers to three, from five today. That would lead to fewer choices and higher premiums for individuals and employers in places like New York, Los Angeles and Kansas City, Mo. The mergers could also hurt doctors and hospitals, because they would have less bargaining power against the larger insurers when negotiating reimbursement rates.
One 2012 study published in the American Economic Review found that consolidation in the health insurance industry between 1998 and 2006 was responsible for a seven percentage point increase in premiums, or about $34 billion a year. And a study by the Robert Wood Johnson Foundation found that hospital mergers also increase costs, sometimes by more than 20 percent.
When Health Insurers Merge Consumers Often Lose http://nyti.ms/2a9swsR