You can’t turn on the telly (shout out to the UK), open an industry email (like this one), or read Süddeutsche Zeitung (wir hören Sie, Deutschland) without someone talking about Wal-Mart, Amazon, or Apple doing something with healthcare. And, this is no different. Sorry. That said, turns out Wal-Mart doesn’t want to be left in the healthcare dust. This week it was reported they are in talks to buy PillPack, an online pharmacy and Humana. Buying Humana comes with a built-in market for Wal-Mart’s pharmacy businesses. If you remember, Aetna once courted Humana, but the US squashed the deal on Medicare monopoly concerns. Wal-Mart has a huge brand, lots of customers, a growing home-delivery service, and a market cap north of $250B so hold on. Big things are coming. Because it’s good to be the king.
Insurance: taking the safe path that might cost you now, but will benefit you in the long run. Insurance company Aetna apparently tried the safe path to accomplish a “megamerger” with Humana by pulling out of ACA exchanges where the two were competing. According to Judge John D. Bates, who officially blocked the merger on Monday, Aetna pulled out of these markets not simply due to profit concerns, but to “improve its litigation position.” Turns out, as anyone with insurance could tell you, the safe path doesn’t always benefit you as much as you think it will. The blocked deal doesn’t bode well for the Anthem-Cigna merger, which has a larger price tag than the Aetna-Humana deal and is similarly stalled by the US Justice Department.
Aetna is splitting up with 11 of its 15 Affordable Care Act insurance exchanges. These cuts come after other major insurers — UnitedHealth and Humana —announced similar plans. Insurers leaving the marketplace reduces competition, which, according to your high school Econ teacher, is bad news for consumers. Additionally, fewer insurers could undo some of the progress the ACA has made (Think: better access to care, lower out-of-pocket costs, and higher quality care). So why the pull-back? Some are hinting that it’s simple retribution but Aetna reported a $200 million loss from its individual insurance, citing lack of healthy people to balance out high-cost customers. And why aren’t healthy people buying on the exchanges? Ask your 20-something, self-employed cousin about premiums vs. the penalty fee. (Hint: one is *much* lower).
The Justice Department filed a lawsuit to block two big insurance mergers, citing that reduced competition would be bad for consumers. In one deal, Aetna would buy Humana for $34 billion. In the other, Anthem would buy Cigna for $48 billion. These mergers would make a dent, reducing the number of mega insurance providers in the US from 5 to just 3. And even worse than a new insurance card, Justice is afraid your coverage could get a *lot* more expensive. Meanwhile, United, the only top 5 insurance company not invited to the party, is just chillin’, wondering who called the cops.