Reasons to be skeptical about the business benefits of insurer mergers
The major U.S. health insurers that plan to merge argue the benefits of their deals will include scale economies, negotiating leverage in provider contracting and diversification, Prospective Health President and CEO Paul von Ebers writes in a post for the Health Affairs blog. But von Ebers cautions there's reason to believe all three benefits will have limits in real-world application.
For instance, while Anthem has estimated that its deal with Cigna will bring nearly $2 billion in synergies, regulatory filings from Anthem state it will not reduce staffing in either company post-merger. And, the post points out, a combined Aetna-Humana may not get any extra negotiating leverage from Humana's significant Medicare Advantage business, as the rates for commercial and MA payments are negotiated separately, even with the same carrier.
Finally, the looming threat of rising healthcare costs could neutralize any marginal benefits gained through these mergers, von Ebers writes. Post