Merger madness: What takeover bids mean for the health insurance industry
Now that Anthem has made an acquisition overture to Cigna and UnitedHealth is courting Aetna, the game has changed for Humana--the insurer that had, till now, garnered the most merger buzz in recent months.
If the current takeover bids between the nation's largest insurers come to fruition, Louisville, Kentucky-based Humana could find itself on the outside looking in, 24/7 Wall St. reports. Humana has been courting potential buyers in a deal many expected would create a domino effect of insurer consolidation.
Humana's shares have been on a downward swing since news broke Monday of possible deals between its fellow insurers, though its stock was up 2 percent as of presstime Wednesday. Share prices surged Monday and Tuesday, meanwhile, for Anthem, Cigna, UnitedHealth and Aetna.
But the recent Anthem-Cigna and UnitedHealth-Aetna merger rumors don't necessarily spell doom for Humana, according to the Wall Street Journal. Its 3.1 million Medicare Advantage enrollees are still an attractive offering to insurers who focus mainly on employer-sponsored plans. Medicare enrollment is projected to hit 30 million by 2025, making these customers a hot commodity for insurers still jockeying to adjust to a post-Affordable Care Act landscape, FierceHealthPayer has reported.
The sudden merger competition also could coax Humana to lower an asking price that some have said is too high to garner a deal.
However current rumored mergers shake out, analysts expect they will whittle the ranks of the five biggest publicly traded insurers down to three, according to another WSJ article.
Meanwhile, there's still a big question mark hanging over all of these deals and potential deals: If the Supreme Court rules for the plaintiffs in the King v. Burwell case, all bets may be off, John Holohan, a senior fellow with the Urban Institute, told MarketWatch. Insurers could go back to "cherry-picking" members, he said. "They could reset premiums--and they could be pretty high."
Potential mergers also could raise serious antitrust issues, MarketWatch notes. The American Association of Family Physicians, for example, sent a letter this month to the Federal Trade Commission warning that major insurer mergers would "limit choices for consumers and decrease competition within the health insurance industry."
To learn more:
- read the 24/7 Wall St. report
- here's the first WSJ article
- here's the second
- read the MarketWatch piece
- check out the AAFP letter
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