Health Care Merger Will Be Bad for Small Businesses

By Guest Post | Monday, October 24th, 2011 | Columns, Economics

By Kelly Tanner Williams, RDH, MS

Regular readers know where this Web site stands on Obamacare, so without rehashing that argument too much, if what America is looking for is improved quality of health care and lower costs, it is very clear that what is needed is greater competition. Competition is what will lead to innovation and it is what will lead to reduced costs — most important for businesses that provide health benefits to their employees.

It’s for that reason that the planned merger between two pharmacy benefit managers should be met with disapproval. It would reduce competition in the pharmacy industry, result in increased costs for prescription medications, and that will translate to higher costs for employers and small businesses.

Pharmacy benefit managers are essentially middlemen that negotiate agreements with health insurance companies and pharmacies dictating the reimbursement rates for prescription medications. They make their money by finding ways to decrease reimbursement rates to pharmacists while raising the amount a health benefit plan will cover. It’s a good business. Express Scripts — one of the firms proposing to merge — saw its revenues go up by 14 percent between 2008 and 2010.

Together with Medco Health Solutions — the other firm in the proposed merger — they would control more than a third of all of the prescriptions in the American market.

The result of a merger would be that smaller community pharmacies, and especially those in rural areas, would have a difficult time keeping their doors open. Fewer pharmacy options means reduced competition, and reduced competition means costs go up.

Who pays the cost increases that will result from this merger? Small businesses: the same ones that are already grappling with the ever-increasing cost of providing health coverage to their employees.

That’s why small businesses are core to a nationwide effort looking to stop the merger. Consumers and pharmacists are also part of the Preserve Community Pharmacy Access NOW coalition.

If we want this nation’s economy to recover, we need to get out of the way of small businesses so they can do what they do best: create jobs. We should not let health care middlemen take advantage of a broken industry and a president who wants to socialize medicine in ways that will make doing business more difficult and more expensive. Consumers and small business owners are doing the right thing by banding together to stop this merger.

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