Consolidation was a driving force in the health care industry in 2015, as the nation’s five largest health insurance companies pursued one another until only three may remain.
Aetna announced plans to buy Humana for $34 billion, and Anthem agreed to purchase Cigna for $54 billion. Together, those companies insure nearly 90 million people. That leaves UnitedHealth, which covers about 85 million Americans, as the industry’s third giant.
Clayton-based Centene was also part of the health insurance acquisition spree. The company announced in early July that it will buy smaller rival Health Net for $6.3 billion, and assume $500 million in Health Net debt. The move will increase Centene’s customer base to 10.4 million members, up from 4 million.
The Year in Brief offers a look at Missouri’s most important business stories of 2015 and previews how those stories could play out in 2016 and beyond.
These acquisitions were spurred by the Affordable Care Act, which has made it hard for companies to raise prices, therefore hurting profit margins. Health insurers are seeking more negotiating power in the hope of cutting costs. However, the decrease in competition brought by these mergers has raised concerns.
In the future
Anthem, UnitedHealth, Aetna and Cigna combined for about three-quarters of Missouri’s entire health insurance market in 2014, according to statistics from the state insurance department. According to a new study by the American Medical Association, less competition means worse coverage. The study says the health insurance mergers are likely to bring employers and patients higher charges.
In Missouri, Aetna and Humana together have half the market of Medicare Advantage, a program for older adults, and UnitedHealth is the only other major insurer currently operating in the state’s Medicare Advantage market. If Aetna and Humana combine, most older Missourians would be left only two choices when selecting a health care plan.
Despite concerns about the risks of reduced competition, some argue that in a complicated industry like health care, less competition is not necessarily bad. Some analysts say that larger insurance companies can have more bargaining power with hospitals and other medical providers to influence lower pricing, making care cheaper for consumers.
In a tweet
The American Medical Association has been one of the most prominent opponents of consolidation in the health insurance industry, saying the mergers “pose a substantial risk” to patients and physicians in terms of “access, quality and affordability” of health care.
Physicians stand up against mergers of the nation’s largest, powerful health insurers: https://t.co/UO7Q2HNqCb
— AMA (@AmerMedicalAssn) November 13, 2015