Mergers and acquisitions is the new trend in the health insurance industry right now. Five of the top health insurance providers in the US are looking to merge and acquire. The top health insurers are merging and this might lead to lesser but bigger health insurance companies. Financial problems, reimbursement issues and technology costs has led to a merger in the health insurance industry. This move will affect the customers, health insurance providers, medical employers and employees.

What does the merging between the health insurance companies mean exactly?

The merger in the biggest health insurance industry is a bold move that can create the same kind of frenzy that Obamacare did. The nation’s top five health insurance companies are merging which might result in three big health insurance companies. These mergers will ensure that each health insurance company involved in the merger will bring something original to the table. The bigger health insurance companies are looking to acquire the smaller health insurance companies while the smaller health insurance companies are looking to merge.

What is the difference between a good merger and a bad merger?

There is good and bad to everything. Health insurance merging can either prove to be a boon or a bane depending on what it brings to the customers. A good merger is the one where the providers will increase the value of healthcare for the benefit of its customers. A bad merger is the kind which discourages competition and doesn’t really benefit the customers.

What does it mean for the consumers and others?

The merging between the biggest health insurance industries will definitely affect the consumers/customers and other individuals involved in the health insurance industry.

Hospitals and doctors - Hospitals and doctors aren’t exactly appreciative of the merger between the giant health insurance companies as they believe that this move can discourage competitive behaviour. They believe that larger health plans and schemes will have greater control of provider networks thus reducing their payments.

Consumers - When the merger between the health insurance company was announced, a fear cropped up among everyone. A fear that the merger will affect the availability and affordability of health insurance for the consumers/customers.

Listed below are some of the ways how health insurance merger will affect the consumers:

  • Cost - The first speculation when the merger was announced was that it would lead to an increase in the premiums making health insurance expensive. Higher premiums can be troublesome for the consumers.
  • Reduced options - There are going to be three (or less) major health insurance provider instead of five, thanks to the merger. The merger between these insurance companies results in fewer options for the consumers to choose from. The consumer will have costlier and narrower options when it comes to health insurance after the merger if the cost of the premiums are increased too.
  • Reduced cover -The merger might reduce the number of hospitals and doctors that come under the plan coverage.

Did Obamacare fuel the health insurance merger?

Obamacare has been a boon to the health insurance industry as it increased its sales by making it mandatory for everyone to have insurance. Obamacare has definitely helped in increasing the revenues but there hasn’t been much difference in the margin of the sales. Acquiring and merging is one of the best ways to grow margin and that’s exactly what the health insurance companies are doing. Obamacare definitely acts as the catalyst for the merger but it plays no role in passing of the merger.

Which are the top five health insurance companies competing for the merger?

The top five companies aiming to merge and acquire are listed below.

  • UnitedHealth
  • Anthem
  • Aetna
  • Humana
  • Cigna

UnitedHealth is aiming to acquire Aetna while Anthem is aiming for Cigna. Aetna and Cigna were rumoured to be taking over Humana which put itself on the market.

Who will be hit hard by the merger?

The merger will serve as a huge blow to individual consumers rather than small business. The rise in premiums and the difference in quality after the merger will affect the individual consumers who will have to pay more for health insurance different from what they had opted for initially. Small businesses will not be affected much by the merger as the difference in the premiums can be covered up without much hassle.

Author's Bio: 

Sanjit Agarwal is a Financial Adviser by profession with an experience of around eight years in Personal Finance. As a Financial Writer, he has penned various write-ups on Insurance, Investments, Money Management, Retirement Planning, Savings, Tax, etc.