The urge to merge is sweeping managed health care. Aetna announced Friday a $37 billion deal to acquire Humana. Anthem and Cigna are in merger talks and could be next. The national for-profit insurers are on an anxious mission to consolidate. These combinations will sharply reduce competition and consumer choice, as five big insurers shrink, probably, to three.
This trend is a direct consequence of ObamaCare, reflecting the naïveté of its architects and the fulfillment of their myopic vision. For Aetna, the deal is aimed at expanding its footprint in Medicare Advantage, a business that has become more financially attractive now that ObamaCare caps profits in the individual and group insurance markets.
The authors of the Affordable Care Act wrongly assumed that new kinds of health plans, engineered in Washington, D.C., would emerge to displace the national for-profit insurers. Their first invention was not-for-profit “co-op” plans that ObamaCare funded with almost $2.5 billion in grants. The co-ops were envisioned as an egalitarian alternative to for-profit insurers, and a compromise to Democrats who wanted a full-blown “public option.”
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