Findings from HCFO-Funded Study on Market Concentration Featured in Health Affairs Blog

Publication Date: 
February 26, 2016

In the Health Affairs blog, Thomas Greaney, J.D., of Saint Louis University School of Law, discusses health insurance consolidation and two possible justifications for the proposed mergers of four of the big five competitors in the health insurance industry. One defense is the “Sumo Wrestler” theory in that as mergers occur in the hospital and insurer sectors, each side “will exert countervailing power against the other”, resulting in lower insurance premiums for employers and individuals. In support of this theory, Greaney cites HCFO-funded work from Glenn Melnick, Ph.D., University of Southern California, that found that increased plan concentration may benefit consumers in the form of lower hospital prices, but only if the health plan market remains competitive. In his HCFO-funded study, Melnick and colleagues examined whether differences in health plan concentration affect hospital performance in important areas, including prices, costs, staffing, capacity, charity care and patient outcomes.