The Trump Justice Department has approved a $69 billion merger between CVS (CVS), the nation’s largest drugstore chain, and insurance giant Aetna (AET). It’s the largest health insurance deal in history.
Executives say the combination will make their companies more efficient, allowing them to gain economies of scale and squeeze waste out of the system.
Rubbish. This is what big companies always say when they merge.
The real purpose is to give Aetna and CVS more bargaining power over their consumers and employees, as well as pharmaceutical companies and healthcare providers (which have also been consolidating).
The result: Higher prices. Americans already spend far more on healthcare and medications per person than do citizens in any other developed country – and our health is among the worst.
America used to have antitrust laws that permanently stopped corporations from monopolizing markets, and often broke up the biggest culprits.
But now, especially with Trump as president and lobbyists and CEOs running much of the government, giant corporations like Aetna and CVS are busily weakening antitrust enforcement and taking over the economy.
They’re also keeping down wages. Workers with less choice of whom to work for have a harder time getting a raise. So when local labor markets are dominated by one major drug chain like CVS or one big box retailer like Walmart, these firms essentially set wage rates for the area.
These massive corporations also have a lot of political clout – another reason they’re consolidating.
We see the same pattern across the economy. Wall Street’s five largest banks now account for 44 percent of America’s banking assets – up from about 10 percent thirty years ago. That means higher interest rates on loans, higher late fees, and a greater risk of another “too-big-to-fail” bailout.
But politicians don’t dare bust them up because Wall Street pays part of their campaign expenses.
