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With merging of insurers, questions for patients about costs and innovation

reed abelson | the new york times | 5 july 2015

PA Consulting Group’s Bret Schroeder, a healthcare expert, is quoted in an article in The New York Times. Bret shares his views on the implications of the recent M&A activity amongst health insurers.

According to the article, the nation’s five largest health insurance companies are circling one another like hungry lions closing in on prey.

On Friday, Aetna said it would acquire its smaller rival Humana to create a company with combined revenues of $115 billion this year. Anthem is stalking Cigna. UnitedHealth Group, now the largest of the five, is looking at its options. At the end of the maneuverings, three national behemoths are likely to emerge.

There is also a scramble among the smaller insurers. On Thursday, Centene, which specializes in offering Medicaid coverage, said it planned to buy Health Net, a for-profit insurer with headquarters in Los Angeles.

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Bret believes, “The nonprofit Blue Cross plans still face the same pressures that the for-profit companies do in needing to generate more revenue to offset their costs.  They all have existing cost structures that are similarly high.  They are still faced with market forces including decreasing revenues and more competition. The question is what Blue Cross plans like Wellmark in Iowa will do to compete better.”

To read the article in full in The New York Times click here.

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