The New York Times editorial page is the latest in a lengthening series of commentaries worrying about the impact of two proposed corporate mergers in the health insurance market. Anthem has agreed to acquire Cigna and Aetna is taking over Humana. That means the number of big health insurers will drop from five to three.
The Times and every other commentator who has weighed in including the AMA has warned that diminished competition is not good for taxpayers or consumers. They want the Justice Department to take a long hard look at these latest mergers to insure that consumers are not stuck with higher premium costs as many parts of the country turn into markets with only one insurance provider.
The critics are wrong. Blocking these deals is a terrible idea. The mergers should be allowed to continue. In fact they should proceed until there is only one private insurer left. Only, at that point should the government step in, declare the last company standing to be required to merge with Medicare thereby letting the free market produce what many reformers have only been able to dream of—a single payer system.
The health insurance market is consolidating due to the fact that being bigger gives insurers more leverage to negotiate prices with hospitals, health care providers and pharmaceutical companies. It also gives insurers greater administrative efficiencies.
In fact, that is exactly why not-for-profit Medicare has administrative costs of about two percent while private insurers average seventeen percent. Medicare is tens of billions of dollars cheaper then private insurance in terms of cost for the same services. The Congressional Budget Office has predicted that the rising cost of private insurance will continue to outstrip Medicare for the next 30 years.
The invisible hand of the market so beloved by those who still favor private insurance despite its utter failure to contain costs is pointing clearly toward merging the private health insurance market. If you want a single-payer system, don’t fight the capitalist forces that favor a gigantic single provider. Just let it happen, then regulate the ‘last man standing’ as a public utility, merge it with Medicare and the VA and voila—single payer here at last.
Thank you Adam Smith and Milton Friedman for doing what Bill and Hilary and Obama could not—getting America to a universal, single-payer health care system.
Art Caplan is a professor at NYU and a correspondent for NBC News.