The titans of the health insurance industry are locked in a dance of buying and selling. Hospitals, physicians, employers and consumers could experience financial repercussions if any big deals are concluded.
Insurance consolidation could spur more consolidation among providers to counter the greater bargaining power of a smaller number of big insurers. But some predict the Obama administration will be wary of approving any big insurance mergers.
UnitedHealth Group, Anthem, Aetna, Humana and Cigna Corp.—the five largest for-profit health insurers in the country—are all in the mix for some kind of tie-up. UnitedHealth has made a move to acquire Aetna, while Anthem has taken a run at Cigna, according to the Wall Street Journal. Aetna and Cigna also have considered buying Humana, which put itself on the block last month.
Scott Fidel, an analyst at Deutsche Bank, equated the managed-care dealings to “Game of Thrones,” the HBO series in which several high-power characters battle to reign over the kingdom.
The merger talk has sharpened the long-standing war of words between insurers and hospitals over consolidation.
Health insurers have been sharply critical of hospital tie-ups across the country, such as mergers in recent years between Trinity Health and Catholic Health East and between Baylor Health Care System and Scott & White Healthcare. America's Health Insurance Plans, the industry's lobbying group, has said that when hospitals merge, it “comes with a price that consumers and employers simply cannot afford.”
Hospitals are just as critical of potential insurance deals, arguing that insurance oligopolies keep provider payments low while boosting prices for customers.
“The question really should be, what value are (insurers) going to bring to the consumer and to the premium payers?” said Chip Kahn, CEO of the Federation of American Hospitals. “Does this consolidation mean that higher cost-sharing and narrower networks are what consumers will end up with?”