Physicians wary of looming mergers of nation’s 'big five' health insurers
Could Highmark, UPMC Health Plan be in play down the road?
June 19, 2015 12:00 AM
Joe Raedle/Getty Images
The combination of any two of the “big five” public insurers — UnitedHealth, Anthem Inc., Aetna, Humana and Cigna — could indeed invite the scrutiny of the U.S. Federal Trade Commission and the U.S. Department of Justice.
By Bill Toland / Pittsburgh Post-Gazette
While the nation’s largest publicly traded health insurers continue an elaborate five-way mating dance, physicians groups worry that a winnowing of the carrier field will lead to lower payments for hospitals and higher premiums for patients.
“Everybody should have serious concerns about that,” said Dennis Olmstead, chief strategy officer and medical economist at the Pennsylvania Medical Society, the state physicians’ lobbying group. “Competition is usually good ... that’s why we have federal antitrust laws.”
The combination of any two of the “big five” public insurers — UnitedHealth, Anthem Inc., Aetna, Humana and Cigna — could indeed invite the scrutiny of the U.S. Federal Trade Commission and the U.S. Department of Justice, particularly any merger involving UnitedHealth, which is already the largest health insurer in the country with more than $130 billion in 2014 revenues.
Various reports from the Wall Street Journal, Bloomberg and others suggest the big five will soon become the big three: UnitedHealth has been in talks with Aetna, while Anthem has been pursuing deals with Cigna or Humana. Meanwhile, Aetna is also looking at Cigna and Humana.
Humana, in particular, has a substantial Medicare Advantage portfolio and could make a good partner for Aetna and Cigna, both of which traffic primarily in commercial and employer-sponsored health plans.
Nationally, the American Academy of Family Physicians sent a letter to the FTC this month, urging a careful review of any proposed mergers.
Those mergers “would have an immediate and profound negative impact on the availability and affordability of health insurance for millions of consumers. Recent actions by the insurance industry, with respect to the narrowing of physician and hospital networks, would only be exacerbated if a single insurer held greater influence over any potential market, state or region,” the letter read.
John Krah, executive director of the Allegheny County Medical Society, said he, too, worried about “a lower level of competition and fewer choices for customers.” Still, from a doctor’s perspective, he said, “There undoubtedly would be some administrative benefits if there were fewer insurers to deal with.”
In Pittsburgh, the aftershocks of a big merger or two might not be immediately felt. The insurance market is already so concentrated here, with Highmark Health and UPMC Health Plan eating up so much market share, Mr. Krah said.
But big mergers could affect the insurers further down the list. If two of the top health insurers were to be absorbed, Highmark Health — currently the seventh- or eighth-largest U.S. insurer by market share, depending on the list — would jump to fifth or sixth on the list.
With $16.75 billion in total revenues last year and a three-state insurance footprint, it could find itself an attractive acquisition target, said Stephen Foreman, a health care administration professor at Robert Morris University in Moon.
“I think they would be an ideal acquisition target for Anthem,” he said. Anthem is the only Blue Cross Blue Shield insurer among the big five and already operates the Blues plan in Ohio.
“I would guess that UPMC Health Plan might be a target, ultimately,” Mr. Foreman added, because the plan — though regional — is growing and has instant access to the UPMC hospital system.
Either plan would give the big insurers a major customer presence in Western Pennsylvania, Mr. Foreman said — and in Highmark’s case, across the state, and into Delaware and West Virginia, too.
But Mr. Foreman, like the doctors and hospitals, was leery of fewer choices and concentrated health plan ownership. “If we end up with two or three large national insurers, they’re not going to compete on price,” he said.
The last major wave of health insurer consolidation came in 2011 and 2012, when Cigna Corp. bought HealthSpring, Aetna bought Coventry and HealthAmerica for $5.7 billion, and Anthem (formerly WellPoint) purchased Amerigroup for $4.9 billion.
Bill Toland: email@example.com or 412-263-2625.
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