We recently heard of the Big Five health insurers vying for takeovers, resulting in a kind of merger mania in our industry. The most current is Anthem's bid for Cigna. Frustrated by negotiation breakdowns, Anthem made the deal public in an effort to "convince" the Cigna management team and board of the potential positive outcomes for them and the shareholders. But what about the members served by those organizations and why is this all occurring now?
A recent Wall Street Journal article1 shed some light on the motivations behind the sudden merger mania. The article alluded to: credit being inexpensive, the fact that some entities looking to pair up have complementary businesses, Health Care Reform has somewhat leveled the playing field, and economies of scale will be accretive. Also noted in this report, is the number of hospitals and insurance providers that have merged in recent years, with more mergers to come in the future.
But will the consolidations also benefit members through expanded coverage, lower costs and improved quality? The health insurance carriers have been working to implement alternative contracts and payment models with insurance providers and hospital systems. Several of these alternatives were referred to as Accountable Care Organizations (ACOs), which took on many structures. The bottom line is, they were designed to provide incentive provider and hospital systems that will deliver higher quality care, better outcomes and increased patient satisfaction. So, will the health insurer entities continue with their efforts to change payment models or will the new, larger scale organizations negatively impact that process?
A clear outcome will certainly be the reduction of options employers and consumers will have when offering and choosing employee benefits. We now have five national insurance carriers possibly reducing to three. Will the fewer options mean less competition, innovation and increasing prices?
While no one has the answers yet as to how the consolidations will shake out, one point is clearly evident. The way health care has been provided is changing and keeping close watch on the impacts is critical. It will be an interesting summer.
1. Dana Cimilluca, Dana Mattioli, and Anna Wilde Mathews. "UnitedHealth, Anthem Seek to Buy Smaller Rivals." The Wall Street Journal. N.p., 16 June 2015. Web.