Health insurance consolidation could be good, bad
Costs may slow for patients, rise for workers
Anthem’s $54 billion deal to acquire rival Cigna is the latest example of a rapid consolidation in the health insurance industry that experts say could help slow the rise in health care costs as insurers get more negotiating leverage with doctors and hospitals.
But it also could boost companies’ health care costs for their workers.
This is the second massive deal this month in health insurance following Aetna’s move to buy Humana for $37 billion. The two transactions would cut the health insurance industry down to three top companies. United Healthcare is the third.
The dominant insurers would be able to raise premiums to employers, but they also could “squeeze payments to providers,” says Farzan Bharucha of Kurt Salmon. “Hospitals will feel a lot more pressure,” says Bharucha, who represents health care providers, including hospitals.
Consolidation worries consumer advocates, who plan to “fully engage” regulators reviewing the latest deal, says Tam Ma, policy counsel at consumer coalition Health Access California.
Anthem, which runs Blue Cross and Blue Shield insurance plans in 14 states and Medicaid managed care plans through the Amerigroup brand in 19 states, already has raised concerns with advocates. Ma notes that California regulators found Anthem’s rate increases to be unreasonable, and says its provider directories are inaccurate and unreliable, making it difficult for consumers to find in-network doctors who are accepting new patients.
Whatever the impact, it won’t be immediate. Neither the Aetna nor Anthem deal is expected to close for at least a year and perhaps late in 2016, in large part because of expected scrutiny from federal antitrust enforcers. That means they won’t affect insurance premiums or plan choices in 2015 or 2016. By 2017, the most likely effect will be an offset to insurance premium growth that year so it shouldn’t be noticeable, says Tucker Sharp, a senior vice president at Aon Health.
The American Medical Association warned against the consolidation, noting that three of four metropolitan areas are already rated as “highly concentrated.” AMA, which represents doctors, found 41% of metropolitan areas had a single health insurer with a commercial market share of 50% or more.