Study: Regulation and competition can work together to control consumer costs

By regulating the selection and structure of marketplace plans, California's healthcare exchange managed to keep premiums low, even in areas with fewer insurers, according to a study published in Health Affairs that shed new light on the ongoing conversation about consolidation.

Researchers at the University of California and New York University compared each state's approach to Affordable Care Act marketplace plans to see how competition among providers and health plans impacted costs. Although both states saw premiums increase from 2014 to 2015 in areas with highly concentrated hospital markets, California saw a much lower hike in premiums in areas with fewer health plans.

Researchers attributed the cost-control to Covered California's selective approach to marketplace plans and its rigorous oversight of insurers. All California plans were required to offer the same deductibles and benefits at each coverage level so consumers can shop based on price.  

In a New York Times opinion piece, two of the researchers argued that even amid the push for consolidation among both payers and providers, "competition and regulation can work together."

"A third party--governmental or quasi-governmental--can use its purchasing power to ensure that negotiating better health care prices benefits consumers, not just insurers," the researchers wrote.

Diminished competition has been a primary sticking point among critics of the Aetna-Humana and Anthem-Cigna mergers that are still undergoing a review by the Department of Justice. Experts at the American Hospital Association reiterated that concern at the group's annual meeting this week, countering arguments from insurers that the mergers won't impact competition and will help the transition to value-based reimbursement.

To learn more:
- here's the Health Affairs abstract
- read the NYT op-ed