“Cigna, an insurer based in Connecticut, said it would pay $3.8 billion for HealthSpring, which offers services and insurance to the elderly. It is the latest deal to extend insurers’ tentacles into new areas of health care.”
State Health Exchanges will come into effect in 2014 and will extend health insurance to more people. Individuals who cannot afford health insurance will receive subsidies. The Economist cites a Boston Consulting Group study which estimates that firms’ revenues will more than double by 2019 to $1.2 trillion. Profits margins, however, may fall due to a new taxes, minimum benefit standards, and more regulation of premiums appears.
What will plans do about it?
Many are diversifying. They are moving into the Medicaid market where States outsource the health care provision of their enrollees to insurers or Medicare Advantage where the federal government is doing the same. Insurers like Aetna are investing in health IT companies; UnitedHealth Group’s IT business (OptumInsight) makes up a large share of their revenues.
Industry consolidation can increase care coordination, but also reduces competition. The effect on premiums and quality remains to be seen.