Mergers and Consumers’ Interest

A number of mergers have made the news: Anthem acquiring Cigna, AT&T acquiring Direct TV, Charter acquiring Time Warner Cable, in each case claiming that those mergers are ultimately good for consumers. In one of his recent pieces Los Angeles Times columnist David Lazarus points out he interviewed several economists who all agree that ultimately mergers aren’t good for consumers. They reduce competition and increase prices while service does not improve. Anthem buying Cigna and Aetna buying Humana are good examples of the consequences. As a result there is now just three main health care companies, Anthem being the largest with 53 million subscribers, United Health Care and Aetna. It’s unlikely the domination of these three health insurance corporations will change in the foreseeable future. Even if new companies are formed, they would not have the clout for a very long time, assuming they would overcome the obstacles before them. With health care, as with any other field dominated by mergers, one is left to think that the consumer will not be a priority when policy decisions are made. Anthem’s earnings, for instance, turned out to be higher than any predictions, including their own. That’s why the trend towards mergers ought to be worrisome to the average person, for corporate interest and consumer’s interest are rarely the same. It may be that one day consumers will reach the same tipping point reached by the character in the movie Network and yell something like “I’m mad as hell and I’m not going to take it anymore!” Doubtful, however, this would be much of a solution. If we are concerned about these mergers, then the onus is on us to act now even if we are somewhat inconvenienced by cancelling our service, switching our policies, writings letters, organizing ourselves, signing petitions, complaining to the corporations’ heads as well as to appropriate Federal agencies—because if we don’t we will in the long run be far more inconvenienced.