The House Ways and Means Health subcommittee held a hearing on consolidation in the health care industry. Chairman Wally Herger (R-Calif.) said in a statement. “In some circumstances, consolidation produces desirable results like improved efficiency and quality,” “However, we must ensure that consolidation is not simply used as a tool to increase revenues by driving up Medicare spending and the cost of private health insurance.”
How about consolidation being used for survival? If members of Congress had read the content of the Affordable Care Act they might understand that there are strong incentives to consolidate as a defensive measure in part to cope with new fees and taxes, cuts in payments, mandated benefits, limits on earnings., etc. What would you do if your business faced with the same factors? Never mind increasing revenue, how about preserving revenue (and jobs)?
On top of all that, this health care thing is a game of leverage, the more leverage you have the better able you are to negotiate for higher or lower fees. Consolidation among health care providers puts the insurers at a disadvantage in negotiating fees with network providers. Consolidation among insurers gives them more clout in an area to demand lower fees from providers…and would you believe that translates into lower premiums.
While spouting rhetoric about more competition in health care and among insurers politicians created exactly the opposite incentives in the Affordable Care Act, not to mention that more competition among insurers in an area is not what you want anyway.
P.S. How would consolidation drive up Medicare spending when physician fees are supposed to be cut by 23% and PPACA contains scores of new programs to lower Medicare costs, just asking.
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