Regulations

ACA Triggering Merger Talks Among Insurers

By Robert Sheen | June 25, 2015

The changes to America’s delivery system introduced by the ny_times_logo Act are causing some the nation’s largest companies to explore merger talks with competitors.

The is likely to lead to “consolidation on a huge scale,” according to Andrew Ross Sorkin the .

Anthem, Inc. has made a merger bid for Cigna Corp., Aetna, Inc. is in discussions with Humana Inc., and UnitedHealth Inc. has “made overtures” to Cigna, writes Sorkin, a highly respected observer merger and acquisition activity.

The impetus for the merger discussion is the ’s focus controlling costs, which has led to seeking ways to operate more efficiently. In many cases, says Sorkin, mergers are intended to reduce costs, and increase profits, through economies of scale.

A physicians is opposing this trend. “Seldom does consolidation result in reduced costs for consumers. Bigger companies mean increased leverage and unfair power over negotiating rates with hospitals and physicians,” said the American Academy Family Physicians in a letter asking the Federal Trade Commission to block such mergers.

“More often than not, consolidation increases costs and reduces for consumers, and we believe this would hold true in the market,” the argued.

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