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Three questions about a health insurance industry in flux

Mergers just one among other disruptive forces, Paul Keckley writes

By Annette M. Boyle

The health insurance industry may have reached a tipping point that goes much deeper than the proposed mergers between four large insurers, Paul Keckley, managing director for the Navigant Center for Healthcare Research and Policy Analysis, writes in a recent blog post.

He suggests discussion about the industry include bigger questions about the nature of the business, including:

What is the purpose of health insurance? If it's to prevent personal financial catastrophe, it's failing, Keckley writes. Medical bills underlie 60 percent of bankruptcies in the U.S., he notes, and medical debt costs American three times as much as bank and credit-card debt combined. Still, the federal government, states, employers and individuals all value private health insurance--if they can afford it.

Should insurers include non-insurance revenues in their calculations for premium prices? The major insurers have expanded their business base to include investments in data and analytics that position them to become "infomediaries" in healthcare, writes Keckley, using UnitedHealth's Optum and Aetna's Healthagen as examples. They also offer retail health and primary care services, own medical groups and are actively expanding abroad.

If providers will be expected to share risks for costs and quality, should regulators make it easier for them to sponsor health plans in the interest of equitable competition? Assuming that Aetna successfully acquires Humana and Anthem and Cigna merge, the new "Big Three" insurers will cover 132.5 million, or 44 percent of total enrollment, and each will have revenues exceeding $100 billion, Keckley writes. Adding in the 36 Blue Cross plans, which he notes increasingly operate as a major plan, means the country's major insurers will cover 237.5 million lives, leaving another 800 insurers, including 80 sponsored by hospitals and healthcare systems, struggling to serve fewer than 30 million people.

To learn more:
- read the blog post

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3 burning questions about the major insurer mergers