FORTUNE, June 26, 2015
COMMENTARY by Eleanor Bloxham
A new round of consolidation in the insurance industry could be pointing the way toward a single-payer system.
Is the market moving us to universal health care?
Following the Supreme Court ruling yesterday, Fortune’s Laura Lorenzetti reported that health insurers who provide insurance through the exchanges were “among the big winners from the Supreme Court’s Thursday decision to uphold Obamacare subsidies.”
The largest health insurers including UnitedHealthcare UNH 0.75% , Aetna AET -1.92% , Cigna CI -1.01% , Anthem ANTM -3.32% , and Humana HUM -0.80% have been in merger talks over the last few weeks. Yesterday afternoon, the Wall Street Journal said, “Let the deal music play. In affirming a central tenet of the Affordable Care Act for the second time, the U.S. Supreme Court has removed a major source of uncertainty for the insurance industry. That is good news for investors banking on consolidation. Indeed, within hours of the decision, Humana stock popped on renewed talk that Aetna had made an offer.”
Indeed, one merger could happen as early as next week according to the New York Times, which is reporting that “A new round of consolidation in the health insurance industry appeared closer as companies seek to grow larger, driven in part by cost-cutting and opportunities that are part of the Affordable Care Act,” noting that Humana “could reach an agreement by next week” with either Aetna or Cigna making the purchase.
The scope of the mergers could be huge and result in unprecedented health insurance giants. On June 16, Fortune’s Shawn Tully wrote that “In the merger world, no sector is hotter than health insurance” and that if UnitedHealth and Aetna “were combined today, they would rank fifth on the Fortune 500, leapfrogging the likes of AT&T, Ford, and Apple.”