(Bloomberg View) -- A wave of consolidation is sweeping throughthe U.S. health insurance industry. Most recently, Aetna has offered to buyHumana, and more such mergers are on the way. Thatmust be bad news for consumers, right? Not necessarily.

As a rule, less competition is bad, because it means higherprices -- and that's the last thing U.S. health care needs. Buthealth care is a complicated business. The likely effect of thesemergers on the cost of insurance isn't so clear-cut. The JusticeDepartment, in deciding whether to oppose these deals, will have toweigh a variety of factors. It's possible, for once, that lesscompetition might do consumers a favor.

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Obamacare, assessed

The crucial complication in health insurance is thatconsolidation in a different part of the health-care industry isalready well advanced. For good reason, the Affordable Care Actencouraged sellers of health care services -- doctors, hospitalsand other providers -- to link up and coordinate their offerings.Better coordination, according to the designers' reasoning, was thekey to reducing unnecessary care and rewarding providers for goodoutcomes rather than the number of services supplied.

That reasoning was correct -- but the result has been anincrease in the size of provider networks, as hospitals merge withphysician groups and each other. This encourages coordinated care,with teams of providers working together to prevent and managediseases at every level of treatment, but it has a side effect.Health-care networks have gained market power to raise theircharges to insurers; in turn, the insurers pass those increases onto their customers.

Containing costs is part of what Obamacare promised, and theneed is pressing. From 1999 to 2014, average annual premiums foremployer-sponsored family health coverage tripled, from $5,791 to$16,834. If you're wondering why you haven't gotten much of a raiserecently, the high and rising price of U.S. health-care services --in some cases, multiples of what the same services cost in otherdeveloped countries -- is a big part of the answer.

Coordinated care is an essential cost reducer, but increasedbargaining power on the provider side of the industry threatens toundo some of the benefit. In most developed countries,responsibility for controlling prices falls on the government; inthe U.S., with its aversion to such interference, the job has longfallen to private insurers. For this to work, insurers need tobargain with providers on equal terms. Within limits, consolidationin the insurance industry can serve this purpose.

You might ask: What's to stop bigger and more powerful insurancecompanies simply pocketing the benefits of lower medical costs,rather than passing them on to consumers?

Obamacare has a provision that helps. The law says that largehealth plans must spend at least 85 percent of the money they takein from premiums on health-care expenses. If an insurer's medicalspending falls short, it must refund the difference to customers.Most big insurers have medical spending that hovers around thatlevel, so if increased market power drives down prices, premiumsshould follow and customers should benefit.

Additional safeguards would also make sense. For instance, stateregulators should be more willing to challenge price rises. Theyought to have made more use of this power already; the need wouldbe all the greater if the number of insurers were to fall.California's insurance commissioner hasn't been shy. Others shouldfollow his example.

Case by case, a balance has to be struck -- enough consolidationamong insurers to drive down costs at the provider level, but notso much as to put buyers of insurance at a disadvantage. TheJustice Department is rightly tasked to prevent mergers that"substantially lessen competition," but it has discretion inapplying that threshold to particular markets and in weighingwhether a merger can also create new efficiencies.

Most state insurance markets are a long way from beingdangerously concentrated. In most cases, therefore, striking theright balance will mean letting these mergers happen. Sometimes, alittle less competition can be good for consumers.

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