Health Care Consolidation Predates the Affordable Care Act, Analysis Finds

Senator James Lankford recently criticized the Affordable Care Act (ACA), asserting that the law accelerated health care consolidation by moving many physicians under hospital ownership and changing reimbursement models. This criticism resurfaces as the Senate prepares to vote on extending enhanced ACA subsidies due to expire. Republicans argue that consolidation has led to higher health care prices and driven physicians to sell practices to hospitals or insurers. However, experts note that health care consolidation preceded the ACA and has been driven by broader financial and market dynamics. From 1998 to 2017, over 1,500 hospital mergers occurred, with additional mergers continuing afterward, indicating consolidation is an ongoing trend independent of the ACA. Hospitals cite mergers as necessary for financial viability and to enhance negotiating power against insurer consolidation, although studies show mixed impacts on costs. The proportion of physicians in private practice has declined from 60% in 2012 to 42% today, with many citing low reimbursement rates and administrative burdens as reasons for selling practices. The 2009 HITECH Act's implementation of electronic health records also influenced physicians’ decisions. Market leverage plays a role, with hospitals leveraging control over physician groups to negotiate with insurers. Insurer consolidation also contributes to market concentration, with major players like UnitedHealth's Optum owning significant shares of physician practices. The number of insurers on ACA marketplaces fluctuates, reflecting regulatory and market conditions. While premiums have generally increased, these rises predate the ACA and reflect broader trends in health insurance pricing. Critics note that pre-ACA individual market coverage often excluded higher-risk individuals and imposed gender and condition-based pricing. The ACA introduced protections preventing these practices but contributed to changes in premiums and deductibles. A 2025 federal report highlighted that hospital and physician consolidation trends began prior to the ACA and continued afterward, driven partly by private equity participation. Hospitals argue that financial pressures necessitate consolidation to maintain care capabilities amid increasing regulatory and operational demands. Overall, the ACA's role in accelerating industry consolidation is debated. Analysts emphasize that much of the restructuring would have occurred regardless, as market forces and policy changes outside the ACA also drive consolidation and pricing dynamics in U.S. health care. This analysis is pertinent for insurance professionals monitoring health policy impacts on market structure, cost trends, and provider-insurer negotiations. Understanding these complex, multifaceted dynamics aids in navigating regulatory and competitive environments post-ACA implementation.