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After merger divestitures, MA market will be primed for disruption


In order to gain federal approval of their proposed mergers, some of the country's largest insurers will have to sell off part of their Medicare Advantage (MA) business, leaving the market "ripe for disruption" by smaller plans, according to a Forbes piece.

For instance, analysts estimate that when they merge, Aetna and Humana could divest anywhere between 5 and 10 percent of their MA lives, writes health policy expert Scott Gottlieb, and together they would control about 25 percent of the MA market. As it stands now, the MA marketplace already is highly concentrated in many U.S. counties

While other MA plans are likely candidates to acquire the merging insurers' divestitures, financial investors still will have a chance to make their mark, "perhaps as part of a broader roll-up strategy," Gottlieb writes. And these type of investors may be have an edge over existing MA competitors as they typically are able to close deals more quickly.

In order to successfully acquire and operate a divested MA plan, financial investors may want to pursue partnerships to handle some of the back-end services, Gottlieb writes. Or buyers may want to seek out plans that never fully integrated with the larger insurer that owned them and thus have legacy infrastructure that their new owners can use.

Now is a prime time to make investments in the MA market, given the program's rising popularity among seniors and the legislative support offered by the Medicare Access and Children's Health Insurance Plans Reauthorization Act, Gottlieb writes. And with Medicare program's transition from fee-for-service to value-based payment structures, MA is ideally positioned to grow even further.

The MA market once had a fair number of startup health plans owned by investors, he adds, until large national insurers bought them up. Now, even healthcare providers are jumping into the MA sector with increasing frequency, FierceHealthPayer has reported.

To learn more:
- read the Forbes piece

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