In­surer com­bos of­fer no price break guar­an­tees for con­sumers


The av­er­age con­sumer should catch a price break if ma­jor health in­sur­ers like An­them and Cigna com­bine and cut their ex­penses.

That’s least.

The re­al­ity will be much murkier for the more than 50 mil­lion peo­ple who may be af­fected if An­them Inc. suc­ceeds with its bid to buy smaller ri­val Cigna Corp. or if other ma­jor in­sur­ers com­bine as many on Wall Street an­tic­i­pate.

Cus­tomers of com­pa­nies in­volved in a multi- bil­lion- dol­lar com­bi­na­tion might see some price changes, fewer plan choices and bet­ter tech­nol­ogy. This all can de­pend on the cus­tomer’s cov­er­age and where he or she lives.

Here are some themes that will emerge if a big deal ma­te­ri­al­izes.




Cost of Cov­er­age


Com­pa­nies of­ten tout the sav­ings they achieve from com­bin­ing with a ri­val. Their busi­nesses will blend back- of­fice oper­a­tions and elim­i­nate over­lap­ping ar­eas of ser­vice to cut costs and avoid scru­tiny from anti- trust reg­u­la­tors.

On top of all that, a big­ger health in­surer might be able to wield more lever­age in ne­go­ti­at­ing lower rates with doc­tors and hos­pi­tals.

Some of these sav­ings may fil­ter down to the con­sumer, but there’s no guar­an­tee.

In­sur­ance is a very mar­ket­spe­cific prod­uct. That means the cost of care in a mar­ket and the health of an in­surer’s pa­tient pop­u­la­tion can af­fect premi­ums re­gard­less of whether the in­surer gets big­ger or smaller.

And an in­surer won’t gain ne­go­ti­at­ing lever­age in a par­tic­u­lar mar­ket un­less it also gets big­ger in that mar­ket.

“The size of the com­pany na­tion­ally ... does not de­ter­mine the strength of its ne­go­ti­at­ing po­si­tion in that area,” said Dan Men­del­son, CEO of the mar­ket re­search firm Avalere Health.

Com­pe­ti­tion in a par­tic­u­lar mar­ket is another key vari­able. In­sur­ers are more apt to lower prices if they have to keep cus­tomers from stray­ing to a ri­val. They also might use com­pe­ti­tion among providers to lower rates by pit­ting one hos­pi­tal sys­tem against another.

The cost of cov­er­age likely won’t spike due to a ma­jor deal be­cause anti- trust reg­u­la­tors won’t let mar­kets be­come sig­nif­i­cantly less com­pet­i­tive, Men­del­son said.

Less Choice

Cus­tomers in some mar­kets may see fewer plan op­tions if big in­sur­ers com­bine. That could be good and bad, depend­ing on the mar­ket and prod­uct.

Fewer choices could mean less con­fu­sion for Medi­care Ad­van­tage con­sumers who some­times have to sort through around 20 dif­fer­ent op­tions to find cov­er­age they like.

Medi­care Ad­van­tage plans are pri­vately run ver­sions of the fed­er­ally- funded pro­gram for peo­ple over age 65 and the dis­abled. These plans can come with dif­fer­ent prices and lots of ex­tras to sort through like den­tal and vi­sion cov­er­age or a gym mem­ber­ship.

Fewer choices also might mean that in­sur­ers won’t have to fight as hard for busi­ness. That could lead prob­lems like lax cus­tomer ser­vice.

“Wall Street will sort out whether a merger is good for share­hold­ers, the larger ques­tion is whether this is good for se­niors,” said Tricia Neu­man, a Medi­care ex­pert and se­nior vice pres­i­dent with the non­par­ti­san Kaiser Fam­ily Foun­da­tion.

Bet­ter Tech­nol­ogy

An­them CEO Joe Swedish says im­proved tech­nol­ogy will be a po­ten­tial ben­e­fit of a com­bi­na­tion with Cigna, and that’s a change many con­sumers might see.

In­sur­ers want to give con­sumers bet­ter in­for­ma­tion on the cost and qual­ity of the care they buy, based on their cov­er­age. De­ductibles and other out- of­pocket costs have been ris­ing for years. That leaves a grow­ing num­ber of con­sumers with big­ger bills to pay be­fore most of their in­sur­ance cov­er­age starts, so they need tech­nol­ogy that helps them com­pare prices and shop around.

In­sur­ers also are us­ing data and tech­nol­ogy more to mon­i­tor pa­tient care and do things like make sure pa­tients stay on their pre­scrip­tions or keep up with their im­mu­niza­tions in or­der to keep costs down.

Change Takes Time

Cigna has re­jected An­them’s latest of­fer, and the two sides don’t ap­pear close to an agree­ment. Even if they ironed out a deal later this sum­mer, it would take months to com­plete. Any ac­qui­si­tion would have to be ap­proved by share­hold­ers and sur­vive reg­u­la­tory scru­tiny, among other steps.

“I doubt any merger would have any im­pact on 2016 of­fer­ings in any prod­uct cat­e­gory,” said Bob Laszewski, a health care con­sul­tant and for­mer in­sur­ance in­dus­try ex­ec­u­tive.

In­sur­ers have largely set­tled on their plans for cov­er­age that starts in Jan­uary. That means cus­tomers may not see changes from a deal fil­ter down to their cov­er­age un­til 2017 or 2018.

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