For those of us who experienced the major consolidation of the health care industry during the 1990s, the recent announcements of Anthem’s bid for CIGNA and Aetna’s proposal to Humana was a “back to the future” kind of moment. Many are wondering whether the Justice Department will allow such a degree of consolidation to take place, and, if so, what the impact will be. A quick search of the internet turned up two studies looking at insurance market consolidation in the past. Health Affairs published a study in 2004 based on market consolidation data from 2000-03. The author, James Robinson, documented short-term price and profit pressure but suggested that long-term success was dependent on new products and new competition. In 2011, RAND published a study that found consolidation among plans benefited consumers by lowering hospital prices. With so few major health plans left, it will be interesting to see how this plays out.
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