U.S. health insurance companies think the U.S. has too many health insurance companies.
A series of mergers have been proposed in recent weeks that would cut the number of major national insurers from five to three. In the process, the CEOs say, they would deliver savings for consumers by eliminating inefficiencies.
You know who else wants that? Bernie Sanders, the senator from Vermont, and others on the far left who have long argued that the country has too many health insurers. Instead of three mammoth insurers, however, they have proposed just one, run by the government, a system known as single-payer health care.
Obviously the insurers don't share the long-shot Democratic presidential candidate's long-shot goal of replacing the private health insurance industry with a "Medicare for all" system. But the arguments for letting giant health insurers combine are strikingly similar to some of the arguments that single-payer proponents have made for years.
Here are some things Joe Swedish, chief executive of Anthem, said on a call on June 22 announcing a bid for Cigna that would create a combined company with 53 million enrollees and $115 billion in revenue:
It would have a strong position across growth markets and the scale to drive greater efficiency and affordability for our customers. ... Customers benefit from the clear improvements in cost efficiency, choice of solutions, and continued investments in simplifying the health-care experience.
The companies announced a $48.4 billion deal on Friday. Swedish expects "synergies" to save the new company $2 billion a year.
And here's an excerpt from a 2013 press release from Physicians for a National Health Program, which advocates for a single-payer system:
Upgrading the nation’s Medicare program and expanding it to cover people of all ages would yield more than a half-trillion dollars in efficiency savings in its first year of operation. ... "Such a financing scheme would vastly simplify how the nation pays for care, restore free choice of physician, guarantee all necessary medical care, improve patient health and, because it would be financed by a program of progressive taxation, result in 95 percent of all U.S. households saving money,” [economist Gerald] Friedman said.
Aetna CEO Mark Bertolini, announcing a merger with Humana on July 6, said the deal would "promote greater operational efficiencies that enable us to lower cost to compete with more cost-effective products and create value for our customers and provider partners." The new company, with $115 billion in combined revenue, would enjoy cost savings of $1.25 billion a year, Aetna and Humana executives said.
Put aside, for a minute, whether insurance industry mergers would deliver the savings they promise, and whether reduced competition would really lower prices for employers and consumers. Put aside the political and practical obstacles to creating a national, government-run health plan in the U.S. Even Sanders's home state, famously agreeable to policies far left of the American mainstream, abandoned its attempt to form a single-payer system.
Everybody seems to agree that shrinking the number of insurers in the health-care system at least has the potential to save money by reducing overhead and paperwork. Consolidation also gives insurers more bargaining power to negotiate with doctors and hospitals, which have been on their own merger streak in recent years. Single-payer proponents say letting the government negotiate (or, more likely, dictate) prices would save billions in hospital, doctor, and drug spending.
Bernie Sanders and the leaders of the health insurance industry that he would abolish agree on more than you might think.