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June 22nd, 2015 
Awake Goy It would appear, whether by plan or unintended consequence, Obama’s dream of a single-payer socialized healthcare is getting closer by the day, and as WSJ reports, drastically increasing the risk that ObamaCare is creating oligopolies, with the predictable results of higher costs, lower quality and less innovation. The five largest commercial health insurers in the U.S. have contracted merger fever, and if the logic of ObamaCare prevails, this exercise will conclude with all five fusing into one monster conglomerate.
As The Wall Street Journal reports,
This multibillion-dollar M&A boom is notable even amid the current corporate-financial deal-making binge, yet insurance is only the latest health-care industry to be swept by consolidation. The danger is that ObamaCare is creating oligopolies, with the predictable results of higher costs, lower quality and less innovation.
The business case for the insurance tie-ups among the big five commercial payers, which will likely leave merely three, is straightforward. Credit is historically cheap, and the insurers have built franchises in different areas that could be complementary. As for antitrust, selling coverage to employers doesn’t overlap with, say, managing Medicaid for states.
More important, the economics of ObamaCare reward scale over competition. Benefits are standardized and premiums are de facto price-controlled. With margins compressed to commodity levels, buying more consumers via mergers is simpler than appealing to them with better products, to the extent the latter is still legal. Synergies across insurer combinations to reduce administrative overhead and other expenses also look better for shareholders.
Why is this happening?
The mergers reflect the reality that government—Medicaid managed care, Medicare Advantage and the ObamaCare exchanges—is now the artery of insurance profits, not the private economy. The feds “happen to be, for most of us now, our largest customer,” Aetna CEO Mark Bertolini said this month at a Goldman Sachs conference.
Mr. Bertolini added: “So there is a relationship you need to figure out there if you’re going to have a sustained positive relationship with your biggest customer. And we can all take our own political point of view of whether it’s right or wrong, but in the end-analysis, they’re paying us a lot of money and they have a right to give us some insight into how they think we should run our business.” Such domestication is part of ObamaCare’s goal of political control, and it may well be that only fewer, larger and more centralized insurers can survive financially.
A healthier market would have many new competitive entrants given the transformative pace of technological and biomedical discovery. But as, The WSJ concludes perfectly – and ominously…
Health care has been consolidating since the 1990s, but ObamaCare has accelerated the trend. Insurer and especially hospital transactions will come under increasing regulatory scrutiny, but the antitrust cops are irrelevant when government’s overwhelming priority is to create and entrench cartels.
So five years into the glories of “health-care reform,” the same antiquated incumbents dominate as they did before, only with less accountability to patients. Cartels don’t care about quality, safety or costs to consumers.
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Sooner or later you run out of things to buy, and if America does converge into a single monster “insurer” or “health system,” it will be the federal government.
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Mission (Almost) Accomplished.
Source Article from http://feedproxy.google.com/~r/zerohedge/feed/~3/FsJrrszyLXQ/story01.htm
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