Three big announcements made it to my inbox recently as follows:
- Aetna has agreed to acquire Humana, one of the country’s leading managed health care companies.
“This transaction is expected to give Aetna over 14 million new members and create the company serving the most seniors in the Medicare Advantage program and the second largest U.S. managed care company. Together, we will have even more resources to invest in new, competitively priced offerings and services for our customers”. - Anthem Inc. struck a deal to buy rival Cigna Corp. for $48.4 billion, wrapping up almost a year of contentious negotiations and potentially creating the largest health insurer in the U.S. This deal will likely wrap sometime late 2016 as will the Aetna-Humana deal.
- “Centene Corporation and Health Net, Inc. announced that both companies have unanimously approved a definitive agreement under which Centene will acquire all of the shares of Health Net The combination of Centene and Health Net would create a leading diversified multi-national healthcare enterprise with more than ten million members across the country and estimated 2015 pro forma premium and service revenues of approximately $37 billion. Centene is expected to offer… a more comprehensive and scalable portfolio of innovative solutions focusing on uninsured and under-insured individuals, including participation in Medicare Advantage, TRICARE, and Veterans Affairs programs.”
It’s interesting to note the emphasis on Senior and Government sponsored plans for two of the mergers. How will this affect us locally? It’s a little too early to tell. We are free to guess.
Far northern California represents a relatively small market share of the commercial market for any carrier. When I hear folks complain that we effectively only have two carriers with the Blues (Blue Shield of CA & Anthem Blue Cross of CA) in our market, I remind them that we should probably be grateful that we even have two.
We simply don’t have a big market for an insurer in comparison to the bigger metropolitan areas. Currently, Health Net’s provider networks are much smaller than the Blues so they aren’t really all that competitive in our area.
Medicaid is known MediCAL in California. Locally we have benefitted from the addition of the Partnership Health managed care platform being added to our area. While provider access has always been an issue with MediCAL, partnership has been very successful in increasing quality and lowering costs in other areas.
I am by no means an expert in Public Health, but one cannot be in my business and not have some exposure to the sector of the health care economy. Participation in the Covered Shasta stakeholders group has been very helpful in expanding that knowledge. “I absolutely concur with your statement about Partnership Health Plan of California being a tremendous benefit to our North state Medi-Cal said Melissa Janulewicz, Regional Services Director Shasta County Health & Human Services.
The Anthem-Cigna buyout does not seem to have the same emphasis on Medicare plans, but they certainly have their eye on the individual subsidized market and the group benefits market. The Aetna-Humana and Anthem-Cigna agreements would likely bring us to only three major insurers. Presumably the regulators will take a hard look at anti-trust issues.
The combined Anthem company could have 53 million members, more than UnitedHealth Group Inc., currently the largest U.S. health insurer. The insurer states that this will help them to negotiate with hospitals and providers. This is certainly a potential positive cost saving opportunity for consumers, if those savings are passed to the insureds. That is a big if. Covered CA insurers recently announced 2016 rate increases as low as 1.8% in Southern CA while Northern CA could be in the 7% range.
There is concern that the mergers will stifle creativity for plan designs, but frankly the ACA (Affordable Care Act, also known as Obamacare) has already done quite a bit to reduce “creativity”.
That is not always a bad thing. Some of the skinny plan designs had become so “creative” it was scary for brokers as we weren’t always sure where they hid the holes.
Agents and Brokers will be watching this closely to see if the companies will look to eliminate commissions.. The increase of fee based brokers is very possible.
As the saying goes, “nothing is so constant as change”. At this point it’s speculation and we “in the trenches” will just have to wait and see.
