The Supreme Court’s recent blessing of Obamacare has precipitated a rush among the nation’s biggest health insurers to consolidate into two or three behemoths.
The result will be good for their shareholders and executives, but bad for the rest of us – who will pay through the nose for the health insurance we need.
We have another choice, but before I get to it let me give you some background.
Last week, Aetna announced it would spend $35 billion to buy rival Humana in a deal that will create the second-largest health insurer in the nation, with 33 million members.
The combination will claim a large share of the insurance market in many states – 88 percent in Kansas and 58 percent in Iowa, for example.
A week before Aetna’s announcement, Anthem disclosed its $47 billion offer for giant insurer Cigna. If the deal goes through, the combined firm will become the largest health insurer in America.
Meanwhile, middle-sized and small insurers are being gobbled up. Centene just announced a $6.3 billion deal to acquire Health Net. Earlier this year Anthem bought Simply Healthcare Holdings for $800 million.
Executives say these combinations will make their companies more efficient, allowing them to gain economies of scale and squeeze waste out of the system.
This is what big companies always say when they acquire rivals.