For decades, policymakers on both sides of the aisle have tried to expand access to health care with the assumption they could pursue that goal through strategies that were indifferent to or actively promoted market consolidation. These strategies, it was thought, would promote efficiency and improve outcomes without affecting costs.

News coverage of health care mergers during the 1990s frequently touted the resulting economies of scale. The Clinton administration’s Federal Trade Commission (FTC) and Department of Justice (DOJ) revised their joint merger guidelines in 1997, “recogni[zing] that cost savings and other efficiencies from a merger can enhance the merged firm’s ability and incentive to compete.” More than a decade later, under the Obama administration, the Affordable Care Act (ACA) of 2010 promoted “integration across the continuum of care.” The law continues to provide cover for proponents of consolidation, who “argue that mergers are a necessity for survival after the passage of the ACA and its new regulatory burdens.”

These views, as it turned out, were woefully naive. The health care system — from payers, like insurance companies and pharmacy benefit managers (PBMs), to providers, like hospitals, physicians, and pharmacies — has indeed become extremely consolidated. More than three in four metropolitan areas had highly or very highly concentrated hospital markets in 2021. Just 44% of physicians owned their own practice in 2022, compared with 76% in the 1980s. And prescription-drug middlemen are also extremely concentrated; the three largest PBMs, group purchasing organizations (GPOs), and wholesalers control between 79% and 95% of their respective markets. At the same time, commercial insurers are integrating vertically, snapping up providers, PBMs, data analytics firms, and other health care businesses. UnitedHealth Group — the nation’s fourth-largest corporation, its largest insurance company, and its largest physician employer — is a prime example.

But consolidation has failed to deliver its purported clinical and administrative benefits. The United States spends nearly twice as much on health care as other countries, with far worse outcomes and vast disparities. Our caretaking workforce is both overworked and underpaid, and the system’s profits increasingly flow to health care rent seekers and middlemen.

Health care is not alone in facing a crisis of consolidation; virtually every industry in America is in the throes of a broader concentration crisis. This is because policymakers have favored consolidation as an industrial policy since the late 1970s.

However, unlike other industries, health care receives most of its funding — 48% in 2023, more than any other source — from the federal and state governments. So, the government is responsible for shaping health care market structure. And it has the power to fix it.

The American Economic Liberties Project has compiled a ledger of harms to chronicle the research showing both the extent of health care’s concentration crisis and how it hurts patients, providers, and other market participants. We also offer several policy suggestions for restoring healthy competition.