Archive for the ‘Medical Insurance’ Category

Could Health Insurer Mergers be a Disaster for Small Businesses?

Saturday, June 27th, 2015

The EconomistA number of health insurance companies are seeking partners as corporate mergers are planned to further consolidate the industry. Anthem Blue Cross & Blue Shield has expressed its interest in acquiring Cigna. Aetna and Humana may also merge. The implications of these proposed mergers are the subject of an article in this week’s edition of The Economist (Better together?) in which I was quoted as expressing concern that the consolidation in the medical insurance sector raises costs for small businesses. Professor Dafny, without speaking specifically about small group markets, presented research, cited in the article, that shows that consolidation in the industry typically results in higher premiums. This is of particular concern given the plan offerings of the parties to the proposed mergers.

Anthem Blue Cross offers medical insurance policies in more than twenty states. Cigna offers some of the most attractive plans in the small group market. Indeed, Cigna became a partner to the Start Up America Partnership LLC, an initiative to support entrepreneurs, offering not only competitively priced health plans, but also mentoring and support to small businesses aiming to access corporate supply chains. As The Economist went to press, the Supreme Court had not yet decided the case before it regarding the subsidies offered under the Affordable Care Act. Cigna rebuffed the initial takeover overtures, let’s hope their efforts to remain independent are successful.