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Consolidation in Health Care Markets: Are Higher Prices Inevitable?

hospital patients health care

Proposed mergers in the health insurance industry and consolidation occurring among hospitals and physician groups are raising alarms that major premium and price increases are soon to follow. In new issue brief, Northwestern University health care economist Leemore S. Dafny finds that insurance mergers tend to lead to premium increases, and calls for requiring detailed reporting on private insurance enrollment, plan design, premiums, and medical loss ratios.

In a companion blog post on consolidation in provider markets, The Commonwealth Fund’s Eric Schneider, M.D., says hospital–hospital and physician–hospital mergers have also resulted in higher prices, though he notes most evidence predates the rise of accountable care organizations. “As the federal government encourages insurers to abandon fee-for-service payments and pay instead for measurably better patient outcomes, many hope this will reinject needed competition among providers,” Schneider says.

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