CVS merger may change health care

American consumers aren’t the only ones struggling with higher health-care costs. CVS Health’s proposed $69 billion purchase of health insurer Aetna is driven in part by the companies’ efforts to get control over more of the costs they face, and to make their operations more efficient.

The question for regulators, though, is whether the combination results in a company that uses its clout to help consumers or squeeze more dollars out of them.

Health-care spending consumes a growing share of the U.S. economy, now accounting for 18 percent of GDP, or more than $1 out of every $6 spent. Federal actuaries project that every aspect of health-care spending — on doctors, hospitals, drugs, medical devices, nursing homes — will continue to grow faster than inflation, driven by higher prices, not excessive demand.

You don’t have to be an economist to know these increases aren’t sustainable for consumers or the government, each of which picks up almost 30 percent of the tab. The health-care industry is coming under increasing pressure to rein in costs by radically changing how providers and insurers make money, paying for the value of the services delivered by doctors and hospitals instead of the volume. That’s a big, much-needed shift.

One challenge in controlling costs, though, is the outsize market power wielded by big players in the health-care industry. Since the early 1990s, insurance companies, hospitals, physician groups, drug-makers and others have been consolidating, seeking to gain leverage against each other.

Which brings us to CVS, a giant in two areas: retail drug sales and “pharmacy-benefit management,” in which it negotiates discounts from prescription-drug companies on behalf of insurers and big employers. CVS also operates health-care clinics in some stores, where physician’s assistants and nurse practitioners treat patients for minor ailments. By buying Aetna, the company would stretch further, providing not merely walkin care and medicines, but also a means to pay for one’s healthcare needs.

That’s a similar model to another big insurer and pharmacy-benefit manager, United Healthcare. And lo, days after Aetna and CVS revealed their deal, United Healthcare announced that it was expanding its investment in physician services by buying DaVita Medical Group, which operates about 300 clinics, urgent care centers and outpatient surgery centers.

This sort of vertical integration is a direct response to pressure from government and big employers.

CVS and Aetna argue that their joining together would work better for consumers. But CVS may be more interested in a tie-up with Aetna as a way to steer the 38 million people with Aetna insurance and pharmacy benefits to CVS’ stores — keeping them away from Amazon, which is widely expected to begin selling pharmaceuticals online, disrupting that business the same way it has upended other retailers.

With prescription-drug prices rising inexorably, antitrust regulators should condition approval of CVS’ purchase of Aetna on the combined company increasing competitive pressures on the rest of the industry, rather than preventing consumers from reaping the benefits of the competition to come.