With health insurance markets highly concentrated at the state level from coast to coast, the proposed merger of Aetna and Humana will face intense scrutiny from federal regulators.
Political advocates of financing the healthcare industry through a publicly operated single payer often extol the societal benefits that scale and standardization could generate.
Market forces put a premium on scale and standardization, too.
This month's proposed $37 billion merger of Aetna and Humana is the latest move in a decades-long consolidation trend in the commercial health plan sector that has accelerated since passage of the Patient Protection and Affordable Care Act in 2010.
If the proposed merger passes Department of Justice muster, the combined new company would have more than 33 million health plan members and would post revenue this year estimated at $115 billion, according to a joint statement from Aetna and Humana.
UnitedHealthcare, a division of East Minnetonka, MN-based UnitedHealth Group, is the reigning king of health plan membership, serving more than 26 million members in the commercial group and individual markets alone.
Vivian Ho, PhD, a professor of economics at Rice University and professor of medicine at Baylor School of Medicine in Houston, says the proposed Aetna and Humana merger could be the end of the line for payer consolidation, with regulators stepping in to preserve the balance of negotiating power between healthcare providers and payers.
"It's fair to say the insurers are way ahead in the consolidation game. There have been studies that have shown that payers have market power," Ho told me last week. "There is definitely a lot of skepticism about this merger going through. The federal government is very sensitive to this."
Monopolistic Market Conditions
Skepticism? Healthcare providers are apoplectic at the prospect of payer consolidation.
Last fall, the Chicago-based American Medical Association released a payer consolidation report based on 2012 data that drew alarming conclusions. A key finding indicated monopolistic market conditions already in place in many states: 17 states reported having a single healthcare payer controlling at least 50% of the commercial market share, and 45 states reported having two payers controlling at least 50% of the commercial market share.
Christopher Cheney is the senior clinical care editor at HealthLeaders.