Insurers exacerbate provider consolidation despite opposition

Although insurers strongly oppose provider consolidation, particularly when it leads to monopolies in the market, some of their actions are actually exacerbating the problem.

For example, insurers often treat large hospitals with a less adversarial approach than smaller hospitals, including agreeing to higher reimbursement charges, Barak Richman, professor at Duke University School of Law, said Thursday at a House hearing.

"Insurers all-too-often become co-conspirators with provider monopolists, agreeing to exclusive agreements that protect both themselves and monopolists but unforgivingly gouge consumers," Richman said.

Part of the problem is insurers "appear inadequately incentivized" to lower costs and are "significantly constrained" from implementing contractual and administrative measures to contain costs, he explained.

Richman told the lawmakers there's an "urgent need to recognize the unusually serious consequences, for both consumers and the general welfare, of leaving insured healthcare consumers exposed to monopolized healthcare markets."

Also testifying before the House Judiciary Committee, Joseph Miller, general counsel for America's Health Insurance Plans, said insurers favor a more competitive market and are taking steps toward achieving that goal.

"Vigorous competition among other participants in the health care system, including hospitals and physician practices, also is crucial to promoting a fair system that serves the best interests of consumers," Miller said. "Such competition--which is stifled in a growing number of markets by provider consolidation--is needed not only to create incentives for providers to control costs and increase efficiency, but also to promote quality improvements and innovation."

To learn more:
- here's Richman's testimony and Miller's testimony (.pdfs)
- check out the House hearing information

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