The Supreme Court's recent decision to maintain subsidies has resulted in the country's biggest health insurers looking to consolidate. Executives of insurance companies believe that consolidation will result in their companies becoming more efficient, able to achieve economies of scale, and reduce waste. However, the consolidation will also allow these insurance companies to have leverage over consumers, state regulators and health care providers. They are able to make these large acquisitions because their Medicare businesses have drastically increased because of the new customers that have joined as a result of Obamacare. Consequently, the stock value for the large insurance companies has also skyrocketed, as S&P 500's Managed Health Care Index reached its highest level in more than 20 years a few months ago. Insurers are also considering rate hikes of 20% to 40% for next year.
Two weeks ago, Anthem disclosed its $47 billion offer to buy Cigna, which will result in the largest health insurer in the country. Similarly, Aetna released last week that it was willing to buy Humana for $35 billion, which would result in the 2nd largest health insurer in the U.S. at a total of 33 million members. Smaller insurer companies are also being acquired. Centene announced a $6.3 billion deal to acquire Health Net, and earlier this year Anthem bought Simply Healthcare Holdings for $800 million.
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Caroline Smith is currently a senior at the University of Notre Dame and is a contributor to Medical Groups. She is majoring in Science-Business and Spanish. After graduation, Caroline plans on entering the field of healthcare consulting. She is most interested in the evolving policy changes in the healthcare industry and enjoys learning about new technologies that are being developed.