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ACA may not be what's driving health insurance industry consolidation

Market changes actually behind M&A fever, Wendell Potter argues

Those who think that the Affordable Care Act has led to health insurance company consolidation are flat wrong, Wendell Potter writes in an opinion piece for the Center for Public Integrity.

News of a proposed Anthem takeover of Cigna emerged not long after the Supreme Court ruled to uphold the ACA's federal subsidies, followed in short order by a merger deal between Aetna and Humana. Some politicians couldn't resist the opportunity to place the blame for these moves squarely on healthcare reform, Potter writes.

Indeed, Senate Majority Leader Mitch McConnell (R-KY) called the developments "the inevitable result of Obamacare's push toward consolidation as doctors, hospitals and insurers merge in response to an ever-growing government."

But what's really at play here are market changes that have made mergers palatable to the health insurance industry--not government intervention, Potter argues.

One factor is the arms race that resulted when health insurers combined forces in the mid-1990s, spurring healthcare providers to respond with consolidation in kind, he says, adding that health insurers look to get even bigger now to regain their bargaining clout with larger provider networks.

Then there's the fact that the rising tide of aging baby boomers will make Medicare Advantage business a hot commodity, which spurred Aetna to link up with Humana and may also be driving the possible Anthem-Cigna deal.

Finally, though the ACA hasn't marginalized employer-sponsored health plans as much as predicted, enrollment in these plans is shrinking, which encourages the big insurers to boost enrollment through acquisition of other companies, Potter writes.

One way the ACA is likely to have boosted health company industry consolidation, however, is through the stabilizing effect the King v. Burwell decision had on an industry that already was poised to make deals.

To learn more:
- read the opinion piece

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