For years, opponents of Obamacare have said that the law’s real purpose was to wreck havoc on the private insurance market to increase the political demand for a government-run single-payer system. Without judging the motives of Obamcare’s creators, one trend is certainly vindicating the cynics: Consolidation among healthcare companies is leaving consumers with fewer choices and more problems.
Anthem recently announced its plan to acquire Cigna, a $54 billion deal. This is on the heels of a similar merger announcement by Aetna that it will buy Humana for $37 billion. Along with UnitedHealth Group, these companies have long reigned as “The Big Five” in health insurance. Soon they will be “The Big Three.”
Mergers go beyond the big companies
It’s not just big insurance companies that are consolidating. A Washington Examiner headline from October 2014 read, “Small insurers devastated by big corporations in Obamacare state exchanges.” Other media outlets, obsessed with enrollment numbers, mostly overlooked the downfall of small insurance companies
The trend was evidence of a fundamental flaw in the new healthcare regime: Obamacare’s regulatory burden made participation in the state exchanges virtually impossible for small insurers.
The Examiner highlighted a Government Accountability Office study quantifying the loss of consumer choice. In 2012, individual insurance market consumers could choose among 36 insurance companies on average. By 2014, the average was 3 carriers.
The exchanges don’t have competitive markets
The few remaining options in the exchanges don’t represent real competition. The only real difference is the company logo next to the plan’s medal level (bronze, silver, gold or platinum coverage). Obamacare’s rules require all plans to cover the same benefits, and insurance companies must all follow the same protocol when pricing their products (rating by age bands, but not gender, health history or condition).
A similar trend of consolidation and standardization has been taking place in the providence of medical care. A survey from The Physicians Foundation shows that in 2008, 62% of physicians were independent practice owners. In 2014, that figure was down to 35%. Overwhelmingly, private practice owners are selling out to large hospital groups, forcing patients to seek primary care from fewer (and larger) providers.
This is bad for doctors and patients alike
Doctors and patients alike lament this change as one that shortcuts the personal, face-to-face interaction and long-term relationships that can lead to a better rapport, and often better information and care for patients.
Obamacare has sped up consolidation, but other bureaucratic expansions of government’s role in health care spurred this trend long before the 2010 law.
Since 1990, the healthcare workforce has grown by 75%, but the majority of those jobs are non-medical (read: administrative) jobs. Paperwork, electronic medical records, coding, tracking down reimbursements and billing have all gotten between doctors and caring for their patients.
Furthermore, a doctor shortage has put pressure on providers to move quickly from patient to patient. This is largely the result of government’s over-involvement in the medical training system, but recent coverage expansions have worsened the strain.
Some political spin-masters are already arguing that consolidation is good: They suggest that it will make the administrative side of health care more efficient.
They will say the same thing of single payer. In fact, they already have.
We need competition for markets to work best
But this argument ignores the economic fact that competition is what drives efficiency. We lack efficiency in today’s healthcare system exactly because we lack real competition and choice, not because we have too much of it.
Even before Obamacare the main trouble with our healthcare system was limited consumer choice. States over-regulated what coverage insurance plans must include. Employers, not individual workers, often selected insurance plans (and still do). Insurance plans limited which doctors patients could see (and still do).
In any other industry, it’s obvious that customization, not standardization, is king. Rather than a one-size-fits-all approach to health care, we should be going in the opposite direction. Individuals should choose what coverage fits their health needs and their budgets and which doctors and treatments they’d prefer.
Just imagine if consumers wielded the power to make these decisions: A robust, free marketplace would allow many companies, including small businesses and start ups, to compete for our business and innovate new and better ways to serve us.
But instead, onerous government regulations are encouraging consolidation, which means fewer choices and fewer innovative ideas about how to meet the individual needs and preferences of consumers. The ultimate consolidation is a single-payer system, which would eliminate competition altogether and thereby eradicate choice. Americans should reject this bad idea and recognize that government overreach is the cause of—not the solution to—our country’s biggest healthcare problems.