FURTHER CONSOLIDATION AMONG THE NATION’S LARGEST HEALTH INSURANCE COMPANIES is expected following the news on July 3, that Aetna, Inc., and Humana, Inc., had entered a sales agreement calling for Aetna to pay $37 billion to acquire Humana.
Should the proposed sale take place, the consequences are not likely to be favorable to smaller clinical labs and local pathology groups. Post-acquisition, a much larger Aetna would probably continue to narrow its laboratory provider networks while leveraging its larger size to gain further pricing discounts from its exclusive national contract laboratory, Quest Diagnostics Incorporated.
Aetna currently has 23.6 million medical members, compared to the 9.7 million medical members at Humana. By contrast, Anthem (formerly WellPoint) has about 38.5 million medical members and UnitedHealth has approximately
36.8 million medical members. Together, following the Aetna/Humana merger, these three insurance companies would be the largest in the United States and would cover 108.3 million, or 74.6% of the 144.7 million people that analyst Mark Farrah Associates reported as having medical coverage at the end of 2014.
Financial analysts expect the proposed sale of Humana to Aetna will get intense scrutiny by federal antitrust regulators. As well, a number of state insurance commissioners have voiced concerns about the consequences of this merger. The proposed sale of Humana also now makes Cigna, with about 14.7 medical members, an attractive acquisition candidate.
Lab administrators and pathologists should also view these developments among the nation’s largest health insurance companies in context with the ongoing enrollment growth in Medicare Advantage plans. CMS data shows that 17.3 million beneficiaries are now in Medicare Advantage. By comparison, as of 2014, there were a total of 45 million seniors enrolled in all forms of Medicare. This means that 38.4% of all Medicare beneficiaries are now covered by Medicare Advantage and predictions are that this percentage will continue to increase.
The rapid enrollment growth in Medicare Advantage plans means proportionately fewer seniors remain in traditional Medicare Part B coverage. Typically, just as the major health insurance companies tend to exclude smaller labs from their provider networks, Medicare Advantage plans do the same by contracting with national labs to access deeply-discounted test prices.
Will Humana’s Sale to Aetna Hurt Smaller Labs?
FURTHER CONSOLIDATION AMONG THE NATION’S LARGEST HEALTH INSURANCE COMPANIES is expected following the news on July 3, that Aetna, Inc., and Humana, Inc., had entered a sales agreement calling for Aetna to pay $37 billion to acquire Humana.
Should the proposed sale take place, the consequences are not likely to be favorable to smaller clinical labs and local pathology groups. Post-acquisition, a much larger Aetna would probably continue to narrow its laboratory provider networks while leveraging its larger size to gain further pricing discounts from its exclusive national contract laboratory, Quest Diagnostics Incorporated.
Aetna currently has 23.6 million medical members, compared to the 9.7 million medical members at Humana. By contrast, Anthem (formerly WellPoint) has about 38.5 million medical members and UnitedHealth has approximately
36.8 million medical members. Together, following the Aetna/Humana merger, these three insurance companies would be the largest in the United States and would cover 108.3 million, or 74.6% of the 144.7 million people that analyst Mark Farrah Associates reported as having medical coverage at the end of 2014.
Financial analysts expect the proposed sale of Humana to Aetna will get intense scrutiny by federal antitrust regulators. As well, a number of state insurance commissioners have voiced concerns about the consequences of this merger. The proposed sale of Humana also now makes Cigna, with about 14.7 medical members, an attractive acquisition candidate.
Lab administrators and pathologists should also view these developments among the nation’s largest health insurance companies in context with the ongoing enrollment growth in Medicare Advantage plans. CMS data shows that 17.3 million beneficiaries are now in Medicare Advantage. By comparison, as of 2014, there were a total of 45 million seniors enrolled in all forms of Medicare. This means that 38.4% of all Medicare beneficiaries are now covered by Medicare Advantage and predictions are that this percentage will continue to increase.
The rapid enrollment growth in Medicare Advantage plans means proportionately fewer seniors remain in traditional Medicare Part B coverage. Typically, just as the major health insurance companies tend to exclude smaller labs from their provider networks, Medicare Advantage plans do the same by contracting with national labs to access deeply-discounted test prices.
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Volume XXII No. 10 – July 13, 2015
TABLE OF CONTENTS
COMMENTARY & OPINION BY R. LEWIS DARK
ARTICLES
INTELLIGENCE
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