The health insurance shakeup continues, and last week’s $37 billion merger of health insurance titans Humana and Aetna is the latest in a wave of deal-making that is likely to reduce the number of large U.S. health insurers from five to three. In addition to the Aetna/Humana merger, Anthem and Cigna have acknowledged discussions about a merger.
According to Leerink analyst Ana Gupte, “The Big Five will be a Big Three,” said Gupte, who estimated public companies led by Anthem/Cigna, Aetna/Humana and United would command about a third of the U.S. health-care market, with regional players and government programs covering most of the rest.
The mega-mergers between healthcare insurers are similar to what has happened in the airline industry. The major airlines have consolidated, which has resulted in less competition and fewer choices for travelers. Air travel has become a substandard service that people have to deal with because they don’t have any other options. These same consequences could happen in healthcare if health insurance giants continue to consolidate.
Health insurance companies are looking to consolidate in an effort to stay afloat and compete on the online health insurance exchanges set up under the Affordable Care Act (ACA). Since the ACA, health insurance companies have been required by law to provide coverage to everyone. This includes those with pre-existing conditions and chronic illnesses. Insurers have figured out how much more this is costing them and are seeking permission to raise premiums to cover their losses. In short, consolidation of health insurance companies trickles down to the patient, they will have fewer options for coverage, a reduction in the number of in-network doctors and fewer participating hospitals. These are all unintended consequences of the ACA.
While patients will have fewer choices than they have had in the past, they will have options. That being said, it is critical for these mega-mergers to keep consumer experience a priority. Leveraging data will be a key to delivering a cutting-edge consumer experience for their existing and newly attained consumers. Data integration from all sources is an enormous undertaking, but one that will be the cornerstone for the success of these mega-mergers. As the health insurance market continues to transform it is becoming more apparent that a single payer model is in our near future.
