Friday, July 24, 2015

Insurer Mega Mergers: What It May Mean To You

Not too long ago Coventry was gobbled up by Aetna, then Aetna grabbed Humana and now Anthem making a deal to purchase Cigna.  With these mega-mergers what should we expect?  Will rates rise because we have less competition?  Will, the now, larger insurers decide to merge and move us even closer to a socialist single-payer system?  

Excerpt by Chad Bray, NewYorkTimes 7-24-15....

The health insurer Anthem said on Friday that it had agreed to acquire its rival Cigna for $48.3 billion in a deal that would further concentrate the United States market to just a few major players.The combined company would have estimated revenue of about $115 billion and serve more than 53 million people with medical coverage.A flurry of deals are reshaping the industry. Earlier this month Aetna agreed to acquire Humana, the smallest of the big five insurers, for $37 billion in cash and stock. If both transactions are completed, the number of major health insurers in the United States will shrink to three.Health insurers are seeking to consolidate to gain greater scale to reduce costs and capitalize on growing opportunities in the government and individual markets. A major force has been the Obama administration’shealth care overhaul, which has bolstered revenues. But greater transparency in pricing and less generous funding of government plans have also put profit margins under pressure.
It is possible that regulators in the United States could block some mergers: Antitrust officials at the Justice Department and the Federal Trade Commission have shown an increasing willingness to do so if they believe the alliances could hurt consumers.
Analysts have said that antitrust regulators would probably allow only some deals to go forward, and that they could stop others if they decided that too much power was being concentrated in too few hands.