Anthem’s agreement to buy Cigna for $48 billion, if consummated, would cement the dominant position of Georgia’s leading health insurer. The insurer deal, announced...

Anthem’s agreement to buy Cigna for $48 billion, if consummated, would cement the dominant position of Georgia’s leading health insurer.

The insurer deal, announced Friday, follows the merger agreement announced earlier this month between two other insurance heavyweights, Aetna and Humana. And both fit into the picture of fast-paced consolidation across the health care industry, partly driven by changes from the Affordable Care Act.

clipboardIf both consolidations are approved by regulators and shareholders, the national effect would be huge, with the number of large, for-profit health insurers shrinking from five to three.

Indianapolis-based Anthem is the parent company of Blue Cross and Blue Shield of Georgia, which is the big player in the Peach State, with about 3 million members here.

Cigna officials here could not be reached for comment, but one industry estimate put that insurer’s health plan and Medicare membership in Georgia at roughly 600,000.

Including debt, the Anthem deal is valued at $54.2 billion, surpassing the Aetna/Humana combination.

Both deals are expected to draw tough scrutiny from federal regulators over competition concerns. Georgia’s insurance department would also have to approve any transaction.

If both ultimately are approved by regulators and shareholders, the two combined companies would be part of a new Big Three, with UnitedHealthcare being the other giant player. Still, other significant insurers would remain in some states, such as Kaiser Permanente.

Insurers have been pursuing such big deals in order to cut costs and increase their clout in negotiations with medical providers and for better pricing on pharmaceuticals.

The Anthem deal ignited immediate concerns from medical groups in Georgia.

The Medical Association of Georgia voiced concern Friday that such insurer consolidation “is only going to limit competition and the individual patient’s choice.”

The Georgia Hospital Association on Friday repeated its recent statement on the Aetna/Humana combination.

BCBSGA_4C“These type mergers could result in a significant increase in market power for the insurance companies while placing health care providers and consumers at a distinct disadvantage at the negotiating table,’’ Earl Rogers, GHA president, said in a statement.

For their part, hospitals and physicians also have been pursuing partnerships and acquisitions, trying to boost their own clout as health care reimbursements increasingly are changing and being tied to the quality of care.

Just Thursday, WellStar Health System entered talks to potentially acquire five Tenet Healthcare hospitals in the greater Atlanta area.

Anthem CEO Joseph Swedish has said the Cigna deal could generate nearly $2 billion in annual synergies, which generally refer to cost savings from eliminating overlap, adding that the combined company would have “the scale to drive greater efficiency and affordability for our customers,” the Wall Street Journal reported.

It’s expected that Georgia insurance regulators will scrutinize both insurer deals for their potential effect on competition in the state.

As for consumers, they would face fewer choices in health plans. That has raised questions on the impact of such deals on the price of health care.

The consumer group Georgians for a Healthy Future pointed out with respect to the Aetna deal that fewer options for patients “can also lead to higher prices.”

 


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Andy Miller

Andy Miller is editor and CEO of Georgia Health News

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