Insurer merger mania paints muddied picture for consumers

More than a third of the U.S. population has health coverage through an insurer that either wants to make a huge acquisition or is about to be swallowed up in one.

Aetna laid out a plan on Friday to spend around $35 billion to buy the Medicare Advantage provider Humana Inc. That came a day after Centene Corp. and Health Net Inc. announced a smaller deal and a couple of weeks after Anthem Inc. went public with its offer of more than $47 billion for Cigna Corp.

The nation’s biggest insurer, UnitedHealth Group Inc., also has kicked the tires on making an offer to Aetna Inc., according to The Wall Street Journal.

Health insurers routinely detail the earnings and savings they expect from these mega deals, but the impact on the average consumer can’t be boiled down to crisp dollars and cents. Nevertheless, here are some answers to questions that may arise if your insurer becomes part of an acquisition.

Q: Will my premium go up?

A: Not necessarily. The cynic might argue that a bigger insurer will charge whatever it wants and not sweat losing a few customers because it has millions to spare and less competition.

However, insurance prices depend largely on the cost of health care locally, not how big an insurer gets nationally. Health care costs and the amount of competition an insurer faces can vary widely depending the market. Premiums could jump if the cost of care spikes where you live and big deals wipe out a few competitors.

But an insurer also might reap some savings from combining with another company. Some of that might eventually trickle down to premiums.

So many variables affect pricing that it’s hard to establish a clear cause-and-effect relationship with a mega deal.

Q: Will bigger insurers be able to clamp down on health care costs?

A: That also depends largely on each market.

In theory, a bigger insurer gains more negotiating muscle over care providers because it can exclude that doctor or hospital from its network and send patients elsewhere. But many of these health care providers also have been growing and gaining their own leverage.

Health care costs are still growing faster than the broader inflation rate, and the rising price of some prescription drugs is drawing concern.

Q: What will the consumer see from these big deals?

A: Better technology comes to mind.

Insurers are racing to develop better apps and other tools to help their customers buy coverage and health care because patients are being exposed more of the cost of care through rising deductibles and other health insurance expenses.

Companies also are using technology more to monitor and improve patient care. That means using tools that tell them if a patient is sticking with a prescription or keeping up with follow-up care.

A big deal would allow companies to combine the best technology from each company.

Q: When will consumers start seeing any impact from these deals?

A: At least a year from now. Insurers have already settled on their rates and other details of the coverage they want to offer staring in January.

These acquisitions still must be approved by shareholders, and regulators have to review them to make sure no company gains an unfair advantage in any market. In some cases — see Anthem and Cigna — the companies haven’t even struck a deal yet.

After an acquisition closes, the companies then have to combine their businesses.

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