Jun 16
2015
The Dance Continues in Health Plan Consolidation
Guest post by Deanne Primozic Kasim, research director, payer health IT, IDC Health Insights.
Who will be the next big health plan to merge with and/or acquire Humana? This has been the topic of a lot of industry conversation and I have actually thought about starting an online betting pool. In lieu of creating a “bracket challenge,” I have been informally asking opinions on this topic and the results are all over the map. A deal for either Humana, valued at $27 billion, or Medicaid provider Centene Corp., at $8.3 billion, would be the biggest acquisition of a U.S. payer in more than a decade. It’s an exciting time this summer with the upcoming Supreme Court decision on the legality of insurance subsidies on the federal marketplace, and an anticipated consolidation between Humana and another large insurer.
Why will health plan consolidation continue? Two major reasons:
Increasing Medicare and Medicaid memberships
According to the Centers for Medicare and Medicaid Services (CMS), Medicare membership is expected to reach 68.4 million in 2023, up from a projected 54.4 million this year. In addition, Medicaid will add 9.3 million people over the same period. Baby boomers are hitting Medicare eligibility at a rate approaching 10,000 per day. Part of the reason companies like Humana and Centene are attractive acquisitions to other payers is because of the size of their Medicare and Medicaid memberships. It is important to note that regardless of how mergers and/or acquisitions play out, payers with multiple lines of government-sponsored business will need effective processes and related IT tools for understanding the complex demographics and health needs of these members. Many Medicare and Medicaid members are high-risk/high-value patients who have clinical and non-clinical factors that can result in the development of costly and complex conditions.