Tag Archives: editor forbes

Smaller insurance companies going away thanks to Obamacare

As we have said several times before and even when yours truly wrote for his old college blog, consolidation is a goal of the progressive secular left.

What is consolidation? It is when smaller players are driven out of the market by slanted government regulations, enforcement, and taxes in favor of the biggest players who tend to be campaign contributors. It also makes controlling the economy easier as a few players are easy to monitor and control. You cannot control the economy without first controlling people, so the less people to control the better. [Smaller companies tend to contribute to Republicans – Editor.]

Forbes: Obamacare Consolidation Continues: Aetna Buys Coventry For $7.3B

Consolidation in the healthcare sector was an obvious consequence of the latest Supreme Court ruling that upheld Obamacare. On Monday, Aetna announced it reached an agreement to buy Coventry Health for a transaction value of $7.3 billion including debt in over to increase its exposure to government business such as Medicare and Medicaid.

On the market side of that issue, major companies are already in consolidation stage. Aetna’s acquisition of Coventry, for which it will pay $5.7 billion in cash and stock, is a direct consequence of the Supreme Court’s decision to uphold the individual mandate. As I wrote in the aftermath of the ruling, “in the face of it, this should be negative for major health insurance companies, as it will drive more customers at lower margins, and positive for Medicaid companies.”

Aetna was very clear in the press release, the transaction will increase its “share of revenues from government business to over 30% from 23% currently.” Coventry will add over 5 million members to Aetna’s plans, including about 4 million medical members and 1.5 million Medicare part D members. The deal also “substantially increase[s] Aetna’s Medicaid footprint, creating more opportunity to participate in the expansion of Medicaid and to pursue high acuity positions as they move into managed care.”

The Supreme Court ruling already fueled WellPoint’s acquisition of Amerigroup for about $5 billion, while last year Cigna bought HealthSpring for $3.8 billion in a push to gain exposure to Medicare patients. Markets appear to approve of consolidation in the industry, as stock prices showed on Monday.