Will Trump’s Team Slow Supersized Health Mergers?
Rising health care costs and the looming expiration of expanded Obamacare subsidies fueled the record government shutdown that ended this week.
But there is another driver of rising costs and prices, one that is manifesting itself in a much broader and more impactful way: the rapid consolidation of insurers, hospital systems, physician groups and pharmacies into giants, effectively giving them monopoly power.
Calling it “mutually imposed monopolization,” Barak Richman, the Alexander Hamilton professor of business law at George Washington University, told me, “It’s not competition. It’s more like collusion. They don’t care about the price. »
In our market-based system, the price of each service is determined by a complex set of negotiations between an insurer and a provider. An insurer might agree to pay grossly inflated prices for a hospital system’s labs in order to gain access to that system’s go-to cancer center — and that cancer center might be located in a city halfway across the country, where the insurer has many customers.
The result is high prices: A patient who visits a hospital lab for a simple blood test could end up with $1,000 or more in deductibles, co-pays and coinsurance.
Studies show that increasing consolidation in health care is driving up prices, harming patient outcomes, and reducing choice for people who need care. A recent study found that six years after hospitals acquired others, they increased their prices by 12.9%, with hospitals with multiple acquisitions increasing their prices by 16.3%.
Initially, anticompetitive consolidations were easy for government regulators such as the Federal Trade Commission and the Justice Department to spot because they involved hospitals acquiring other hospitals or providers in their own market sector. But in recent years, new types of transactions have become more difficult to monitor. Giant hospital systems are now acquiring providers far away, in deals known as cross-market mergers. Insurers acquire medical practices and specialty pharmacies, often called vertical mergers.
President Joe Biden had made monitoring healthcare mergers a priority, issuing guidelines for 2023 that included these new types of consolidation. Its FTC Chairman, Lina Khan, has sharply criticized this trend.
His successor under President Donald Trump signaled a more moderate approach. But in an exclusive interview with KFF Health News, Daniel Guarnera, director of the FTC’s Bureau of Competition, said the new leaders of the FTC and the Justice Department approved the 2023 guidelines “as a framework” for companies considering a merger.
What this means for the future remains unclear. Khan now advises New York City Mayor-elect Zohran Mamdani.
