Plan quality, as well as customer service, may be affected. (Photo: Getty Images)
Health insurance company Anthem announced Friday that it will buy rival insurer Cigna for $48.3 billion.
The deal comes just weeks after fellow health insurance providers Aetna and Humana announced their merger, concentrating health insurance providers in the U.S. to just three big companies. (UnitedHealth Group is the third.)
The latest deal will impact more than 53 million people, representing about 17 percent of the U.S. population, The New York Times reports.
“We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve,” Joseph R. Swedish, the CEO of Anthem, said in a news release on Friday.
1. There will be fewer options for insurance
While these mergers might reduce costs for companies that provide insurance, what do they mean for people who are insured? Some markets will now have less competition — won’t that allow costs to go up?
Antitrust regulators have said they plan to investigate these mergers, as options for consumers are dwindling. A recent Wall Street Journal analysis found that the Aetna-Humana merger will greatly increase the number of U.S. counties where at least 75 percent of Medicare Advantage (Medicare offered by a private insurance company) customers will only have one option for insurance.
The mergers will also remove competitors from the exchanges where people can buy insurance coverage under the Affordable Care Act in several states, the WSJ reports.
2. Plan quality and customer service could take a hit
However, Swedish said in his news release that the Athem-Cigna merger will provide an “acceleration of innovative and affordable health and protection benefits solutions” to customers. But … will it really?
It’s doubtful, says health care expert Sarah O’Leary, founder of Exhale Healthcare Advocates, a national consumer health care advocacy. “When consumers have less choice and the insurers’ realize it, the cost of consumers’ coverage could rise,” she tells Yahoo Health. “Plan quality, as well as customer service, may be affected.”
3. Cost increases for the uninsured
While health care expert and consultant Howard Peterson, a managing partner of TRG Healthcare, tells Yahoo Health that he doesn’t expect health care costs to go up for most of us who are already insured, he says they likely will for people who are still uninsured.
Here’s why: Health insurance providers want to lower the costs of their coverage and essentially pay less to health care providers like hospitals and doctors. Those hospitals and doctors may in turn raise their rates for those who are actually paying out of pocket. “Generally, to the extent that you can get price payers to pay prices, you do,” Peterson says.
4. Out-of-pocket payments could increase
People who are insured may feel the impact of this as well, health care expert Caitlin Donovan, spokeswoman for the National Patient Advocate Foundation, tells Yahoo Health.
Think of it this way: If you have to visit the emergency room and your health insurance covers only a certain percentage of ER visits, you could end up paying more out of pocket if your hospital charges a higher overall rate.
5. Prescription costs may rise
The cost of your prescription drugs — as well as your affordable access to certain brand-name drugs — could be impacted as well. “Insurers can place drugs on a ‘specialty tier’ that requires patients to pay a percentage of the cost of the drug rather than a simple copay,” explains Donovan. As a result, the cost of those drugs could be thousands per month or even per pill, and there’s really not much you can do about it.
Less competition means insurers have more power to add these barriers in their plans, Donovan says.
6. More doctors to choose from
But there might be an upside to these mergers. The new insurance companies have talked about the ability to provide a larger network, and Donovan says that may end up being true: “We can be hopeful that if you’re currently in a narrow network, you’ll have more access to providers in the future.”
Your health insurance premium (i.e., what you pay every month to get health care coverage) shouldn’t go up, either. “We’re not worried about premiums increasing as much as out-of-pocket costs and changing networks,” says Donovan.
But while experts have a good idea about what may happen, they all say it’s hard to tell exactly what the fallout of these mergers will be.
Of course, we have a little time to wait and watch. “They’re big companies — it’s going to take a while,” says Peterson. “A lot will happen over the next two or three years.”