Obamacare allowed health providers to form vertical monopolies, raise costs

If it's so great, then you and a group of people who want it can get together and do it.

I've explained to you how it will not be about money, after the organization is formed.

So you don't need government. Unless you're just lazy and expecting "someone else" to do it all for you.

Just create your own "public option".

Under the ACA, how are the two so different?

 

if it's so bad, let the people decide, republican fought it so hard cause they saw it as an Obama win

 

You're free to decide, FreshAir.
A group of people could create their own option under the ACA.
I guess you must think you're more incompetent than government, or perhaps government has the "magical touch".

 

we did not get the option, we would love to decide, let us decide

 

These mergers took place before ACA, and have nothing to do with it. For example CVS merger with Caremark happened in 2006, and it created the largest PBM in the nation.

 

give people the choice, and you're free to pay for private care too

corporations will opt out of the current model soon, it's costing them and the employees too much

 

You can get together with some other people and create your own "public option", if you really wanted to. I keep telling you this.

I don't think you really understand what a "public option" would have been under the ACA. It would pretty much have gotten the same subsidies as private insurance plans.

So why you think this sort of government plan would have been so great is a mystery.

 

In a thread about how monopoly insurers can drive up costs, isn't it self-evident how introducing a new competitor in every market could lower costs?

State Public Option Plans Making Progress Reducing Consumer Costs | Commonwealth Fund

 

This thread is also about how (Obamacare) the ACA system, drove and put insurers under pressure to consolidate, to be able to maximize the subsidy for their lower income customers.
It's not simply the normal type of monopoly situation.

Insurers are under a lot of pressure because they want more customers to buy from them, but a lot of their customers can barely afford it. Therefore there's a huge amount of pressure to be able to get that extra subsidy, even if it involves gaming the system. Unlike a regular monopoly, it's not just a simple matter of eliminating the competition to be able to raise prices. Many of the lower income customers could barely afford to buy the insurance without the subsidy being gamed to be as high as possible. The whole industry is under pressure to consolidate if they want to be able to maximize their number of sales. Imagine a situation where if there is a monopoly, the industry (at least in a local regional area) will be able sell to more people. This is it.

The price-fixing scheme in the ACA puts the insurance companies under pressure to monopolize in a different way. This is a vertical monopoly, where the company does not buy its competitors but it buys the companies that it buys from. Some may think that insurance companies earn plenty of profits, but we need to consider profit margins on individual sales. In some situations the ACA's price-fixing scheme can put insurance companies between a rock and a hard place, where it's hard to provide the insurance, the profit per customer barely provides much incentive to provide that insurance. It strains the business model. As a result, these companies are pushed to make up profits from other indirect ways, by increasing their own costs. But they own the other companies that money is ultimately going to.
The system has put the industry under great pressure to do this. I don't think it's only just an issue of greedy companies wanting to maximize profits. If the companies want to keep the insurance business viable, they have to consolidate companies and do this. It's not just an issue of raising prices but of being able to have more customers and provide coverage to some semi-lower income people.

But then, once they do this, then the insurance companies have a monopoly and are in a position to start raising prices, now out of greed in addition to a sense of it being essential.

Some might think this means a government run alternative insurance provider would be a good to provide the competition to prevent these monopolies. But the thing I do not think these people realize is that, under the ACA, a government run provider would be under the same sorts of pressures as the private insurance industry is.
Even a government run provider in the game might not prevent this phenomena from occurring. A government run provider would have to earn what is essentially a form of "profit" too, to be able to make sure they can self-sustain operations and pay those whose jobs it is to run it. As the government provider finds its profits squeezed, it is going to come under the same sort of financial pressures that these private insurers found themselves under. It could make it difficult for them to compete if they are playing by fair rules while their private competition isn't. For example, the government option might be the player to provide the cheapest prices, but the private competition could be able to offer a better value, better service and some more coverage, by being able to circumvent the price-fixing scheme in the ACA. As a result, most rational consumers would pay a little bit more to go with the private company.

At the same time, there might be pressure on the local officials running the government insurance provider to collude with the private industry to fix prices so they could get the subsidy from the bigger system and be able to provide more coverage to the people in that area. They are colluding to fix prices so that the cost to the consumer is less so that more people will buy, so that their total revenue will be greater. Of course that local subsidy is just being taken away from the bigger system, so it's not really a benefit to the society at large.

What I'm saying is that the "public option" (under the ACA) would come under a lot of the same pressures that the private industry is coming under.
That means that introducing a "public option" is not necessarily going to make these monopolies go away.
The public option might be driven out of business by private industry which is looking for loopholes to gain every possible advantage. Or the public option might just collude and consolidate with private industry due to the financial pressures they are under, due to the dysfunctional incentives built into the ACA system, the same forces that have been already been causing the private insurance companies to consolidate.

The only way out of this (that doesn't involve a massive reworking of the ACA) would be to give the public option extra funding of subsidies to compensate, but that is what Republicans (and the insurance companies) were afraid of in the first place. Then it would be a thin line before those subsidies became high enough to result in unfair competition with private industry.

 

What you're imagining is an extremely normal type of monopoly situation: competition driving down margins, leading incumbents to the impulse to minimize or eliminate competition. The ACA didn't invent that dynamic, though I suppose to the extent it increased competition one could argue it exacerbated that impulse. But consolidation in the health care industry has been happening since at last the '90s. If we have a problem here, it's a failure of antitrust law, which seems not to have kept up with the times.

But tying this to ACA subsidies make very little sense. The large majority of ACA marketplace buyers live in rating areas with 3+ insurers competing, and the ACA marketplaces in general are a small market segment anyway. What merger in recent years has been spurred by the urge to have additional pricing power over a small minority of the small market segment buying in the marketplace?

WSJ wants to tie the impulse for vertical integration to the MLR requirements (as if vertical integration hasn't been an attractive concept for would-be monopolists since the late nineteenth century), which is a very different subject than the structure of the ACA's marketplace subsidies. But observing that owning a PBM or provider system can be more profitable than owning an insurer and concluding that the problem is that insurance margins should be larger is certainly an WSJ Editorial Board-esque take.

Of course it would be under the same market pressures, that's the point. Sounds like you're arguing there's no benefit to having two (or more) insurers selling in a market vs. one. Empirically, the opposite has proven to be true in the marketplaces.