With respect to concentration, as I noted in my article, there’s nothing remarkable about concentration in health insurance versus other lines of insurance, but the political class is not jumping up and down about auto or other insurers.

Who knows what that optimal economic scale of a health insurer is? I think that if we had a free market in health insurance, health plans wouldn’t have “networks” at all, but that there’d be a schedule of allowances, whereby a diagnosis would trigger a determined cash flow to the insured party. In such a case I suppose there’d be a lot more competition.

However, I may be wrong, and people might value health insurers’ negotiating networks with providers. In that case, there will be a certain level of concentration. Of course, providers are inefficiently organized: General hospitals are incrtasingly concentrated, through a couple of decades or so of mergers.

If we had a free market in providers, there’d be more specialized providers, but I expect that niches would be dominated by “world beaters” which usually happens in specialized markets. That’s Michael Porter’s Competitive Advantage grade 1, page 1.

So, I don’t think we should get wrapped up in how concentrated a market is, but whether it is contestible: Can potential new entrants credibly threaten to disrupt the status quo? That goes for both insurers and providers.