Anthem recently announced their intention to buy Cigna for $54.2 billion. Just a few weeks ago, Aetna moved to buy Humana for $37 billion. If these deals are approved, Anthem, Aetna, and UnitedHealthcare would be the largest insurers in the country.
Why the move towards consolidation? For insurers, the price transparency brought on by the Affordable Care Act has weighed down profit margins. They view partnerships as an opportunity to save costs. Anthem estimates they could save $2 billion in annual costs if the merger is approved.
Now the big question remains: Will the government approve the consolidation? “Economic evidence shows with fewer competitors, insurance premiums tend to be higher,” said Thomas L. Greaney, an expert on health and antitrust law at Saint Louis University, in a recent article in the New York Times. “Less competition among insurers produces higher prices for consumers.”
The lack of competition may not only affect patients. For physicians, the merger may put them at a disadvantage in negotiations over payment and coverage for services provided. In addition, practices will have to align internal processes with new payer policies to ensure they are paid for the services they provide.
If this deal passes shareholder and regulatory approval, it is projected to close in the second half of 2016. What do you think of the potential merger? Comment below.