The idea that more insurance companies in an area will increase competition and thus hold down premiums was never valid simply because the more insurers, the less leverage any one would have to negotiate with health care providers – health care claims are what drive premiums, not profit.
Even though government policy makers didn’t know this, the insurance companies sure do. So, now we see the results. In theory, a greater clout in the market will put greater pressure on health care prices.
Healthcare-insurance firm Aetna announced a $37 billion agreement Friday to acquire smaller rival Humana in a deal that continues the rapid consolidation in the U.S. healthcare industry.
In the first six months of the year, a record $296 billion in deals have been agreed in the industry, according to Dealogic, a research firm that specializes in mergers and acquisitions.
Aetna will pay approximately $230 a share for the Humana, which is the U.S.’s second-largest provider of private Medicare insurance — a booming business that has expanded rapidly alongside an aging U.S. population.
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It appears that the only competition among health care insurers is who can raise their rates the most.
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I don’t think that is the case. At this point their experience with claims is not fully credible us as long as there are no restrictions on enrollment each year there will be problems with adverse selection not to mention all the additional fees and other costs imposed on insurance companies. They are making more on volume, but that won’t keep per capita costs from rising.
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