Is Increasing Industry Consolidation A Threat? Look At Anthem Inc (NYSE:ANTM) – Cigna Corporation (NYSE:CI)

Is Increasing Industry Consolidation A Threat? Look At Anthem Inc (NYSE:ANTM) – Cigna Corporation (NYSE:CI)

It looks like the increasing consolidation in any industry might become a threat. The worries have become more evident now with the health policy experts raising alarm bell on the industry consolidation that has enough potential for higher premiums. Look at the acquisition of Cigna Corporation (NYSE:CI) by Anthem Inc (NYSE:ANTM) for $54 billion. The latest came on the heels of Aetna Inc (NYSE:AET) agreeing to acquire Humana Inc (NYSE:HUM) for $37 billion. Similarly, Centene Corp (NYSE:CNC) acquired Health Net, Inc. (NYSE:HNT) for $6.8 billion.

Biggest By Enrollment

The agreement between Cigna Corporation (NYSE:CI) by Anthem Inc (NYSE:ANTM) would create the largest company as far as enrollment is concerned in the health insurance industry. The merged entity would establish a firm with annual revenue of $115 billion and 53 million members. That means it would become the biggest health insurer in the United States in respect of the membership.

Currently, UnitedHealth Group Inc (NYSE:UNH) is enjoying 46 million memberships and remains the leader. The combination of Aetna Inc (NYSE:AET) and Humana Inc (NYSE:HUM) would have approximately 33 million members. These three forms the top big three companies in the United States to dominate the health insurance business.

Premium Goes Up

The new combination meant that anti-trust authorities will have to review the merger proposals thoroughly before giving its approval. The regulators needed to make sure that consumers were not taken for a ride by the healthcare providers. California Insurance Commissioner, Dave Jones, indicated that his office would ‘carefully review’ the proposed Anthem Inc (NYSE:ANTM) – Cigna Corporation (NYSE:CI) merger.

A leading attorney in the Consumer Watchdog, Jerry Flanagan, said that consumers should not wait for any rebate checks. He said that history illustrated that when health insurance firms integrate, premium costs increase. If the pending deal is approved by the regulators, he feared that consumers will have to face higher deductibles when the company co-pays. That is something known as ‘hidden premiums’.

Anthem, Inc., incorporated on July 17, 2001, is a health benefit company. The Company offers a range of network-based managed care plans to large and small employer, individual, Medicaid and Medicare markets. Its managed care plans include preferred provider organizations (PPOs), health maintenance organizations (HMOs), point-of-service (POS), plans, traditional indemnity plans and other hybrid plans, including consumer-driven health plans (CDHPs), and hospital only and limited benefit products. In addition, the Company also provides an array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. The Company provides an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits, radiology benefit management and analytics-driven personal health care. The Company also provides services to the federal government in connection with the Federal Employee Program (FEP).

The Company’s products and services include Preferred Provider Organization (PPO) products offer the member an option to select any health care provider, with benefits reimbursed by the Company at a higher level when care is received from a participating network provider; Consumer-Driven Health Plans (CDHPs) provide consumers with increased financial responsibility, choice and control regarding how their health care dollars are spent; Traditional Indemnity, Indemnity products offer the member an option to select any health care provider for covered services; Health Maintenance Organization (HMO) products include comprehensive managed care benefits, generally through a participating network of physicians, hospitals and other providers; Point-of-Service (POS) products blend the characteristics of HMO, PPO and indemnity plans; ACA Public Exchange and Off-Exchange Products, In the Company’s Individual and Small Group markets it offers bronze, silver and gold products, both on and off the public exchanges, as well as platinum products, both on and off the public exchanges; Administrative Services, which include services to Large Group employers that maintain self-funded health plans; BlueCard; Medicare Plans, which offers a variety of plans, products and options to individuals age 65 and older, such as Medicare supplement plans, Medicare Advantage (including private fee-for-service plans and special needs plans), Medicare Part D Prescription Drug Plans, or Medicare Part D and Medicare-Medicaid Plans (MMPs); Individual Plans, which offers a range of health insurance plans with a variety of options and deductibles for individuals under age 65 who are not covered by employer-sponsored coverage; Medicaid Plans and Other State-Sponsored Programs; Pharmacy Products, it markets and sells integrated prescription drug products to both fully-insured and self-funded customers through its health benefit subsidiaries; Life Insurance, offers an array of individual and group life insurance benefit products to both Large Group and Small Group customers in conjunction with its health plans; Disability, which offers short-term and long-term disability products, in conjunction with its health plans; Radiology Benefit Management, offers outpatient diagnostic imaging management services to health plans; Personal Health Care Guidance, which offers leading evidence-based and analytics-driven personal health care guidance; Dental; Vision Services and Products and Medicare Administrative Operations. The Company has three operational segments: Commercial and Specialty Business, Government Business and Other. The Company’s Commercial and Specialty Business and Government Business segments both offers a mix of managed care products, including PPOs, HMOs, traditional indemnity benefits and POS plans, as well as a variety of hybrid benefit plans including CDHPs, hospital only and limited benefit products.

Commercial and Specialty Business

The Company’s Commercial and Specialty Business segment includes its Local Group, National Accounts, Individual and Specialty businesses. Business units in the Commercial and Specialty Business segment offer fully-insured health products; provide an array of managed care services to self-funded customers including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services, and provide an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits, radiology benefit management and analytics-driven personal health care guidance.

Government Business

The Company’s Government Business segment includes Medicare and Medicaid businesses, National Government Services, or NGS, and services provided to the federal government in connection with FEP. Medicare business includes services, such as Medicare Advantage, Medicare Part D, and Medicare Supplement. Medicaid business includes its managed care alternatives through publicly funded health care programs, including Medicaid, Temporary Assistance for Needy Family programs (TANF), programs for seniors and people with disabilities (SPD), programs for long-term services and support (LTSS), Children’s Health Insurance Programs (CHIP) and ACA-related Medicaid expansion programs. NGS acts as a Medicare contractor in several regions across the nation.

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