The recent mergers of large health care insurers threaten to decrease competition and carrier response to customer needs, but promises some benefits to employers and the benefits industry, as well, experts said during a panel discussion at EBA’s Workplace Benefits Summit in Orlando Wednesday.
In July, Aetna agreed to buy Humana, the second-largest provider of private Medicare insurance, for $37 billion in cash and stock as an effort to broaden its health care coverage. That same month, Anthem announced it will purchase Cigna for $48.4 billion.
“Employers are concerned when there is lack of competition,” said Larry Boress, president and CEO, of the Midwest Business Group on Health and another panelist. “From a purchaser perspective, you want a partner that is going to meet your needs. When you have large firms coming together, the infrastructure will take years to get in place and a reluctance to customize will also be there by the insurance companies.”
On the flip side, however, Winkler said, large scale consolidations could spur innovation from smaller players hoping to grab a piece of the competition.
“The emerging trends in the health care landscape are not coming from the large health plans,” he said. “When one carrier has a lot of the marketplace it also creates an opportunity for innovation and if employers embrace that, they will have the opportunity to disrupt the market.”
In short, the panel said, the lack of competition can be a challenge but employers do have some recourse.
“Employers need to always set their expectations and make them known,” Boress said. “In too many cases the employer accepts the carrier’s performance guarantee and plan options that always favor the plan without challenging it.”
At the end of the day, carriers are supposed to be working in partnership with employers, he said.
“Employers need to set expectations. Often times it’s the squeaky wheel that gets the grease. It’s not the largest employer that gets what it wants, it’s the one that challenges the plan,” Boress added.
“Employers need to be aggressive and represent themselves as the purchasers,” he said. “If we allow the consolidations to affect our ability to drive our benefits and productivity, we’re giving that up and employers can’t afford to do that.”
“It comes down to how willing are employers to make those tough decisions,” Winkler agreed. “I would challenge employers to think differently about disruption in the marketplace.”