Dust Settles After Health Company Acquisition Race

Few were privy to the story of how the five largest health insurance providers in the United States planned to whittle their numbers down to only three companies. That is, until announcements of submitted documents for company mergers dominated the industry press.

The saga itself is a veritable who’s who of the health insurance industry as the “top five” battled for a larger stake in the consumer pool. And it all ended with Aetna’s announcement that it will be acquiring Humana and Anthem’s submission that it will be taking over Cigna late last month.

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Now that the dust has begun to settle in the wake of these deals, analysts can begin to see what this will mean for the health insurance industry.

Aetna, based in Hartford, Conn. and ranked as the third largest provider of health insurance, released on July 3 that it would be purchasing Humana, based in Louisville, Ky. and ranked as the fifth largest health insurance company, for $37 billion.

Its merger would make Aetna by far the largest player in the private-insurer version of Medicare so immediately there is concern about market concentration. However, Mark Bertolini, CEO of Aetna, argues this will better position the company to work closely with healthcare providers and the federal government to bring costs down.

“We have an opportunity to change the trajectory of healthcare costs,” he said to The Wall Street Journal.

Then on July 24, Anthem, based in Indianapolis and considered the second largest health insurance provider, announced it would purchase Cigna, the Bloomfield, Conn.-based company last ranked as the fifth largest insurance provider, in a $54.2 billion deal.

This merger would be the largest-ever health insurance transaction and it would mean Anthem would lead in overall customer base. However, UnitedHealth Group, currently the largest insurance company in the country, would remain the largest by revenue, holding strong with its projection of $154 billion this year.

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But the crux in all of this is that none of the deals are final yet.

Because of the size of both of the mergers, The U.S. Justice Department is conducting its antitrust review to see if the combined companies would have too much power in the marketplace. These reviews are done to ensure the interests of the American consumer are being considered in these deals.

Hospital and doctor groups have already weighed in against the acquisitions, while both the CEOs of Aetna and Anthem maintain that limiting competition will allow their companies to streamline and become more effective in the evolving industry.

Both are still hotly contested views among industry analysts. Primary concerns will remain that an absence of competition will allow insurance providers to dominate regions with unfair pricing structures.

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