Hospitals have criticized the potential mergers between the "Big Five" insurers, arguing that they could result in lower payments for providers and higher prices for consumers.
All five of the largest for-profit insurers in the United States have been reported to be considering potential mergers or acquisitions:
- The Wall Street Journal reported last week that UnitedHealth Group has recently made a bid to takeover Aetna;
- Aetna has reportedly been weighing an offer to purchase Cigna or Humana; and
- Cigna on Sunday rejected a $47 billion takeover bid from Anthem following months of negotiations, although Anthem has continued to press for a deal.
Insurance consolidations likely in 2015, experts say
Potential merger implications
Merged insurers could hold greater bargaining power against providers, which could have financial repercussions for hospitals and physicians, Bob Herman reports for Modern Healthcare.
Insurers argue that the mergers will help them to increase their negotiating power and better compete with larger companies. But providers have long been opposed to insurer mergers, noting the deals could create oligopolies that lower provider payments and increase consumer cost-sharing.
"We believe that consolidation of large commercial insurers is the root of higher prices for consumers," says American Hospital Association (AHA) general counsel and SVP Melinda Hatton. She says that AHA would anticipate that the Department of Justice's antitrust division would "scrutinize every deal ... to ensure that none of these new consolidations would add to that problem."
According to Modern Healthcare, an increase in mergers among health insurers could lead to more provider consolidation.
Five characteristics of the most successful M&A deals
WSJ: Mergers could reduce competition
A Wall Street Journal analysis of federal and state data found mergers among large health insurers could lessen competition, affecting the availability of plans sold through Medicare Advantage (MA) plans and the Affordable Care Act's (ACA) insurance exchanges.
AMA: 10 states with the strongest insurance monopolies
For example, the analysis found that a proposed merger between Aetna and Humana would increase the number of counties in the United States where at least three-quarters of MA enrollees have the same plan by about 180—and remove a competitor from the ACA exchanges in eight states. And the Journal found a possible merger between UnitedHealth and Aetna would remove a competitor from the ACA's exchanges in 11 states (de la Merced/Abelson, "DealB%k," New York Times, 6/21; McCoy, USA Today, 6/22; Herman, Modern Healthcare, 6/20 [subscription required]; Wilde Mathews/Weaver, Wall Street Journal, 6/21; Japsen, Forbes, 6/18; Cimilluca et al., Wall Street Journal, 6/16).
Five key infographics to help hospitals with financial pressures
Hospital finance executives are facing pricing pressures, transitions in patient coverage, and the emergence of new competitors. With your world changing so rapidly, it's hard to pinpoint the most critical strategic focus areas among all the noise.
We've taken a look at all the forces at play and distilled eight mandates you must address. Make sure your to-do list contains these must-dos—and click below to explore each mandate's details, impact, and difficulty.
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