2018 has been a year full of game-changing shifts and innovations in the health insurance landscape. One of those milestone changes we’ve referenced before is the recently approved merger between pharmacy major player CVS and health insurance network Aetna.
One of the initial hurdles it had to overcome was a potential block from the Department of Justice. The block was requested by New York Assemblyman Kevin Cahill, who voiced concerns that the move would reduce competition, forcing up drug prices.
According to Cahill, “The sheer magnitude of this vertical restructuring is likely the biggest in healthcare and perhaps in the history of commerce in our nation.”
That was a concern shared by some legislators in California as well. Their concerns led to clearing the deal with a condition: a promise that premiums wouldn’t increase as a way to cover merger costs.
At this point, it’s still unclear exactly what the long-term impacts on premiums in future years might be. But CVS got everyone on board, and on Nov. 28, the merger was officially approved.
The healthcare world is bracing for how this is likely to change the playing field. As we said earlier, the most obvious problem is the one that has given legislators pause: the risk of narrowing market options, reducing competition and subsequently driving up prices.
There is a very real possibility that any potential savings that occur from consolidating will just go to further line insurance companies’ pockets rather than actually reaching the consumer.
Another potential impact that critics have pointed out is the possibility that this will allow providers in Aetna’s network to limit consumer’s options while raising the prices.
This concern is well-grounded given that two monolithic institutes combining gives them a lot of power to decide what kinds of care and prescriptions are covered (and which are not).
Beyond just the limitations that this could pose to consumers, the merger puts other healthcare providers in a hard place as well. The DOJ recently also approved a similar merger between Cigna and Express Scripts.
In an era where power is consolidating to a few heavyweights, smaller companies might be forced to consider consolidating — or be crushed under the momentum of the giants.
Captiva exists to help your business bow out of those risks entirely. We’ve known for a long time that outrageous pharmaceutical costs and unchecked insurance providers should not be the status quo.
The Health Rosetta paradigm was developed to define a better way to provide benefits, and we’re here to apply that to your company. In the process, you’ll be freed from concern over the problems big business mergers could fuel.