Just days after the Supreme Court declared subsidies legal many major health insurance companies declared mergers. Mergers include Aetna ( ) buying Humana ( ) for $230 a share, 23% higher then market price the day before the announcement.
The new Aetna Humana hybrid will have more than 33 million members, and bring in estimated revenue of about $115 billion per year, with 56% coming from government-sponsored programs such as Medicare.
Other possible mergers include Anthem (CNN money.) is interested in buying Cigna ( ), and UnitedHealth ( ) was even rumored to be interested in Aetna or Humana. That’s on top of a spate of health industry deals and negotiations last year. At one point, Pfizer ( ) offered over $100 billion for AstraZeneca ( ), though the talks fell apart. You can read more at
Opinions on the Mergers
Above are the facts, two major insurers are merging and some other healthcare industry giants may follow suit. Below is our opinion on what this means.
Our past polls have shown that we have two groups of Americans. One group that wants equal access to healthcare for all Americans, one group that wants a Market driven system.
America is a democracy and sometimes we simply get what we asked for. Not only is health care reform implemented under the Affordable Care Act itself a quasi-public system that is equal parts public healthcare and subsidies and equal parts private markets and shareholders… it now seems the health industries of America (insurers, drug makers, hospitals, device manufacturers) are following suit by consolidating private for-profit companies who make an increasing percentage of their income off of public programs.
The truth is there are many pros and cons here. It’s good for the Market, but could bring us close to monopolies. Many wanted a single payer system, this is closer to that in a way. Health insurance is all about cutting deals with doctors and hospitals, less competition could mean better prices for consumers. Less competition could also mean bigger profits for insurers at the expense of people.
One thing is for sure, the drive to keep stock prices rising and profits up is surely going to be a little tricky here in a world where America continues to acquire healthcare debt at an unsustainable pace and people continue to struggle to afford healthcare without government assistance.
Is it good, is it bad, are we happy, are we sad? It’s probably early to tell. What really matters is the answer to this question: “will insurers jack up rates for 2016 and are the American people getting affordable quality healthcare?”