Health plan consolidation: Bigger isn't better
It's time to re-examine a system that's allowed health plans to build overwhelming power in local markets.
Editorial. June 5, 2006.
"The combination will benefit every participant in the health care system, including consumers, employers, physicians and hospitals."
-- UnitedHealth Group CEO and Chair William McGuire, MD, after the July 6, 2005, announcement of the United-PacifiCare merger
When health plans have merged, they've said that a bigger insurance company would be a better insurance company. And that has been true -- if you're a health plan executive. For the rest of the health care continuum -- not so much.
Megamergers have helped health plans cement dominant positions in more and more metropolitan areas and have pushed them to record profits and given massive payouts to their top executives. Consider one beneficiary of consolidation whom United's Dr. McGuire didn't list in his comment above -- himself, currently sitting on a staggering $1 billion-plus in stock options.
Meanwhile, plans have been known to use their monopsony positions -- a marketplace imbalance in favor of a powerful purchaser -- to squeeze reimbursement to and create bureaucratic hassles for physicians and others. At the same time, plans continually have raised premiums for consumers while typically offering no increase in benefits. "It is clear that patients -- the ultimate consumers of health care -- are not benefiting from these mergers," writes the AMA Private Sector Advocacy group in its latest study of health plan market domination.
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Copyright 2006 American Medical Association. All rights reserved.
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