Late last week, it was announced that Aetna Inc. agreed to buy Humana Inc. for $37 billion in cash and stock to broaden its health care coverage.
The news has big ramifications. BenefitsPro asked some industry experts about what the merger—and rumors of subsequent dealings in the health care industry—means for agents, consumers and the industry in general. Here’s what they said.
May help consumers.
I can see where the Aetna and Humana deal makes sense and could actually be a good thing for consumers. Their core strengths complement each other, and a bigger, stronger Aetna will compete more effectively with United, Anthem and other major geographically concentrated Blue plans.
Regarding the rumored United and Aetna merger, I can’t see that alliance boding well for consumers. And, the same can be said for Anthem and Cigna. We’ll wait and see what’s in store relative to consolidation, but it seems clear regulators will emerge as key participants in a post-Obamacare marketplace. Also increasingly clear is that if this type of activity is left unfettered, less competition is a distinct possibility.
—Mike Sullivan, Executive VP and CMO, Digital Insurance/Digital Benefit Advisors
Photo: Associated Press
Good news for voluntary market.
“Too early to tell what it means for consumers. As Anthem and Cigna start talking again, we should expect more of these announcements. It only makes sense, as carriers are forced to spread their costs over a wider base of policyholders. In this case, bigger really is better. It’s the only way to meet the regulatory mandates and have any hope of making a profit.
As a lifelong voluntary guy, I always see things through that prism. I think these mergers will only prolong the inevitable and rates will continue to climb, no matter what. That means gaps will get bigger and voluntary will remain the best answer. Good news, for sure, if you’re in that business.”
—Brian Hicks, Benefits Selling columnist and author of “The Tinderbox Tapes”
Photo: Getty Images
There are positives and negatives.
“My guess is that the stockholders for both organizations will do well, and it remains to be seen for the welfare of the others. Is bigger better? Sometimes yes, and sometimes no. The market will determine the long term results. Hopefully, the government stays out of the way to manage the delivery and financial impact to agents, consumers, employers, providers and other interested stakeholders.
—Mark Roberts, BenefitsPro blogger
Photo: Associated Press
Bigger relevance for agents.
“After 21 years in the health insurance industry, having started out of college as an account executive at Aetna, I have found that the merger with Aetna and Humana and rumored additional mergers in the insurance industry have caused me to truly focus on the value-based services that I’m providing to my clients that are outside of the insurance carrier relationship.
“As we have less carrier choice from consolidation, and more regulated pricing, the key to our industry and our relevance and value to our clients is to provide strategic planning, communications, compliance, technology and wellness consulting services in conjunction with our employer and employee advocacy service model.”
—Kevin Davis, employee benefits consultant at Univest Insurance
Photo: Getty Images
Single-payer system?
I believe choice is good for consumers. So as our industry continues to contract, fewer choices is a bad thing. But in this case, considering the big mergers have been predominantly on the fully insured side, I actually see a bright side. PPACA has largely homogenized plans and rates. And MLR’s reduce runaway profits of the carriers.
So if these carriers can truly increase efficiencies, reduce redundancies, and most importantly, gain additional leverage in provider contracting arrangements, there could be some positive impacts to these mergers. One cautious point, however, is as we reduce the carriers, we move more closely to a single payer system, which not only could have the impact of full government run health care occurring without actual government involvement, but could make it an easier argument for the Feds to do just that.
—David C. Contorno, CEO of Lake Norman Benefits and Benefits Selling’s 2015 Broker of the Year
Photo: Associated Press
