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House Subcommittee Hears Testimony on Health Care Industry Consolidation

Written by Jared Alves, Kevin Kappel, and Stephanie Willis

A House Ways and Means Health Subcommittee hearing on September 9th showed that the debate over the meaning of the terms “consolidation” versus “integration” in the health care context is more than petty semantics.  During a hearing titled “Health Care Industry Consolidation,” the majority of the participants testified that, in theory, health care industry integration can lead to lower prices, greater efficiency, and better outcomes.  But many argued that provider mergers in the health care delivery and insurance markets are integrations in name only.  Instead, these consolidations have led to higher prices and a glut of services.  

Ways and Means Committee Chairman Rep. Wally Herger’s (R-CA) opening statement expressed his concern that the health care reform law will encourage even more consolidation and further price increases rather than meet the intended goals of efficiency and quality improvement.  Ranking Member Rep. Pete Stark (D-CA) even noted that the Republican majority’s focus on the negative effects of consolidation is perhaps the opposite of the party’s traditional stance in favor of competition.  Overall, the House members and witnesses seemed to agree that additional government involvement was needed to ensure that health care reform efforts like the Affordable Care Act foster the positive aims behind integration while mitigating the negative effects of consolidation.   

During the Q&A session, House members quizzed witnesses on issues such as who suffers the most from consolidation and what motivates health care providers to consolidate in the market.  They also asked whether the Affordable Care Act and other government actions will combat the negative effects of consolidation on health care costs and quality of care while still fostering competition.  The debate will likely continue as more facts come to light about pending health care mergers and the more data becomes available about ACOs.

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