Health care consolidation: Crippling rise of costs is hidden in plain sight

Health care costs are going up fast, and it’s hurting everyone. But if we take a close look, we can see that just a few big companies are the main reason for this. A 2023 study shows that only five insurance companies (if you count all the Blues as one) have controlled over 90% of the market for the last ten years.

If you track the revenue of UnitedHealth, Cigna, Aetna/CVSHealth, Anthem/Elevance, and the Blues combined, you’ll see that as their revenue goes up, so do the premiums charged to employers and employees.

Source: KFF and Kaiser/HRET Annual Surveys of Employer-Sponsored Health Benefits

The current administration talks a lot about the need for more competition in health care. They focus on drug prices, hospital monopolies, and price transparency, but they don’t talk about the real issue driving costs higher every year: the health insurance industry itself.

Let’s be clear. The average family now pays over $23,000 a year for health insurance, which is about a third of the average household income. And that doesn’t even include deductibles. This huge cost isn’t just hard to handle, it’s crushing families and businesses. Employers are paying more and getting less, and families are struggling to choose between paying for health care and buying food.

Even though insurance companies can negotiate lower prices with doctors and hospitals because they’re so big, premiums keep going up. The reason? There’s not enough competition among the insurance companies to cause the price of premiums to go down.

People are saying that price transparency — knowing the cost of health care services — is important for lowering costs. And yes, it is important to know prices so we can make better decisions. But even as we ask for more transparency, we’re ignoring the data that’s already in front of us. Just look at the stock market. The rising revenues of the largest insurance companies show us that they’re making reliably huge profits from the very system they’re supposed to help manage and there’s no end in sight

Every year, these companies merge and buy out their competitors, reducing competition and gaining more control. Some studies suggest new regulations like the Affordable Care Act (ACA) have accelerated consolidation, but let’s be real: It’s not about better care or lower costs — it’s about control.

This consolidation doesn’t just affect insurance. Hospitals are merging too, partly because of the pressure from these big insurers. The result? Fewer independent doctors and hospitals, less competition, and higher costs for everyone. Insurance companies are even buying clinics and employing doctors directly. What started as a system to manage risk has become a giant machine that controls every part of health care — and we’re all paying the price.

The real question is, what are we going to do about it?

First, we need to push for more competition in health care, including in the insurance industry, by enforcing existing laws that would limit further acquisitions and consolidations. In addition, federal and state legislatures must address anti-competitive behavior in order to limit the power and influence of these massive corporations.

Independent doctors and small pharmacies are being pushed out by these big companies, and that’s hurting everyone. We need to support competition throughout the entire health care chain. Only then can we start to lower costs, improve access, and make sure patients get the care they need.

It’s time to stop believing that more information alone will solve the problem. More transparency without competition only shows us how badly we are being taken advantage of. We have enough evidence right in front of us. The real challenge is whether we have the courage to act.