A recent health policy brief from Health Affairs evaluates the extent to which the Affordable Care Act (ACA) addressed the pervasive challenges of uninsurance that the Act was working, among other things, to address. The ACA worked in a number of ways to reduce the extent of uninsurance, such as by allowing individuals to stay on their parents' health insurance until the age of 26, and by vastly expanding Medicaid (initially required, and later made by the Supreme Court only optional), in addition to maintaining private marketplaces in which to shop for insurance. The brief reports that while the uninsurance rate had been over 30% in 2009, it declined to 19% in 2014. Uninsurance declined across all age groups to varying degrees and particular in the later years once more of the ACA provisions went into effect, though effects were, not surprisingly, the most modest in those states that chose not to expand Medicaid. An important takeaway: Medicaid expansion is an effective path toward combating lack of healthcare coverage. The states that witnessed the most notable differences in uninsurance were, in descending order: Kentucky (5.8 percentage point decline), Nevada (5.5), West Virginia (5.4), Oregon (4.9), California (4.7), Washington (4.7), Arkansas (4.2), Rhode Island (4.2), New Mexico (4.1), and Colorado (3.8). So interestingly, there's a great deal of ideological and geographic diversity represented among these states that witnessed the most marked changes.
One caveat to the importance of this change has to do not with uninsurance, but with underinsurance, which I have written on previously here and here. In this case, what I am talking about is the concern regarding the fact that hospital mergers are on the rise, with mergers consistently resulting in higher prices for consumers given the reduction in competition. In 2015, 112 hospital mergers were announced, compared with 95 in 2014 and only 66 in 2010. Thus, these are dramatic increases over the last six years, with acquisitions occurring across for-profit, not-for--profit, academic, rural, and urban health centers. Recently, a large merger was announced in California, which would combined hospitals in Orange County, Los Angeles County, and part of Northern California (Providence Hospitals and St. Joseph Health), all told implicating $18 billion and would rank among the largest hospital chains in the nation. This accompanies much national news of major health insurance acquisitions, with Anthem proposing in 2015 a $48-billion takeover of Cigna, and Aetna proposing a $37-billion takeover of Humana, though both deals remain pending.
On May 24, the State of Missouri issued an order banning a proposed Aetna-Humana merger with respect to certain insurance products, in particular the Medicare Advantage market. Given the clear reduction in competition that this merger would pose for Missouri, the American Medical Association (AMA) praised Missouri's protection against anticompetitive healthcare markets. The challenge, of course, is that when mergers are not precluded, premiums can rise; individuals may be unable to obtain better quality insurance; and thus should they become sick, they find themselves spending excessive shares of their income on health expenses not accounted for by their insurance company due to deductibles, coinsurance, and copayments. Indeed, the average cost of an inpatient stay in the absence of a competitive health insurance market is $1,900 higher than those facing at least four rivals. This is hardly a trivial sum.
Reducing uninsurance is absolutely essential, and the ACA has made extraordinary progress in this regard as many obtain coverage for the first time (or for the first time in a while) and are able to successfully obtain services that they would not have otherwise. Even as of 2014, the rate of uninsurance was down 25%. But continuing to control costs is also imperative so as not to bankrupt the poor and working classes, effectively punishing people for using the coverage that they have worked to obtain (and Obamacare premiums are projected to increase next year to a degree higher than in years previous). The Third Circuit made some progress to this end in granting on May 24th the FTC's request for an injunction pending the appeal of a proposed hospital merger between Penn State Hershey Medical Center and Pinnacle Medical System. Arguments for the case will be held on the week of July 25.
Corporations are by definition profit-motivated. That is the nature of doing business. But the FTC and others can work to control the extent to which such reductions in competition can occur to the detriment not simply of consumers' economic well-being, but also by extension, of their physical and mental well-being.
One caveat to the importance of this change has to do not with uninsurance, but with underinsurance, which I have written on previously here and here. In this case, what I am talking about is the concern regarding the fact that hospital mergers are on the rise, with mergers consistently resulting in higher prices for consumers given the reduction in competition. In 2015, 112 hospital mergers were announced, compared with 95 in 2014 and only 66 in 2010. Thus, these are dramatic increases over the last six years, with acquisitions occurring across for-profit, not-for--profit, academic, rural, and urban health centers. Recently, a large merger was announced in California, which would combined hospitals in Orange County, Los Angeles County, and part of Northern California (Providence Hospitals and St. Joseph Health), all told implicating $18 billion and would rank among the largest hospital chains in the nation. This accompanies much national news of major health insurance acquisitions, with Anthem proposing in 2015 a $48-billion takeover of Cigna, and Aetna proposing a $37-billion takeover of Humana, though both deals remain pending.
On May 24, the State of Missouri issued an order banning a proposed Aetna-Humana merger with respect to certain insurance products, in particular the Medicare Advantage market. Given the clear reduction in competition that this merger would pose for Missouri, the American Medical Association (AMA) praised Missouri's protection against anticompetitive healthcare markets. The challenge, of course, is that when mergers are not precluded, premiums can rise; individuals may be unable to obtain better quality insurance; and thus should they become sick, they find themselves spending excessive shares of their income on health expenses not accounted for by their insurance company due to deductibles, coinsurance, and copayments. Indeed, the average cost of an inpatient stay in the absence of a competitive health insurance market is $1,900 higher than those facing at least four rivals. This is hardly a trivial sum.
Reducing uninsurance is absolutely essential, and the ACA has made extraordinary progress in this regard as many obtain coverage for the first time (or for the first time in a while) and are able to successfully obtain services that they would not have otherwise. Even as of 2014, the rate of uninsurance was down 25%. But continuing to control costs is also imperative so as not to bankrupt the poor and working classes, effectively punishing people for using the coverage that they have worked to obtain (and Obamacare premiums are projected to increase next year to a degree higher than in years previous). The Third Circuit made some progress to this end in granting on May 24th the FTC's request for an injunction pending the appeal of a proposed hospital merger between Penn State Hershey Medical Center and Pinnacle Medical System. Arguments for the case will be held on the week of July 25.
Corporations are by definition profit-motivated. That is the nature of doing business. But the FTC and others can work to control the extent to which such reductions in competition can occur to the detriment not simply of consumers' economic well-being, but also by extension, of their physical and mental well-being.
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