New Health Care Symposium: Dubious Health Care Merger Justifications—The Sumo Wrestler And ‘Government Made Me Do It’ Defenses

Editor’s note: This post is part of a Health Affairs Blog symposium stemming from “The New Health Care Industry: Integration, Consolidation, Competition in the Wake of the Affordable Care Act,” a conference held recently at Yale Law School’s Solomon Center for Health Law and Policy. Links to all posts in the symposium will be added to Abbe Gluck’s introductory post as they appear, and you can access a full list of symposium pieces here or by clicking on the “Yale Health Care Industry Symposium” tag at the bottom of any symposium post.
Market power is pervasive in the health care sector. Most hospitals and insurers, and many physician specialties, compete in highly concentrated markets as defined by the guidelines of the federal antitrust enforcement agencies and standards recognized by the federal courts. Moreover there is abundant evidence that market concentration translates into higher prices. Economic studies of hospital mergers in such markets show price increases over 20 per cent.
Other empirical work reveals that insurance market concentration is associated with higher premiums and that mergers have resulted in significant price hikes. Although the evidence is less robust, studies of physician pricing also indicate that fees are higher where specialty groups face little competition.
In recent years providers and insurers have undertaken even more highly concentrative mergers — ones vastly exceeding concentration levels that government g...

Source: Health Affairs Blog - February 24, 2016 Category: Health Management Authors: Thomas Greaney Tags: Costs and Spending Health Professionals Hospitals Insurance and Coverage Medicare Payment Policy Population Health Quality insurance mergers market consolidation Supreme Court Yale Health Care Industry Symposium Source Type: blogs