UnitedHealthcare continues to enjoy the top spot in health insurance as Anthem and Aetna prepare to fight federal lawsuits against their proposed mergers with Cigna and Humana, respectively.

Market Share

If the Aetna-Humana and Anthem-Cigna mergers go through, the top five names in health insurance would be reduced to three. Anthem-Cigna would also steal UnitedHealthcare’s spot as the United States’ biggest health insurer by total enrollment. Federal regulators are concerned that the mergers would be anti-competitive for consumers, particularly given the dominant market share UnitedHealthcare already holds for Medicare Advantage.

Currently, UnitedHealthcare holds 21 percent of the total Medicare market and serves the largest number of Medicare Advantage beneficiaries. Humana takes a close second with 18 percent.

In defense of the mergers, some have argued that “market share” should be viewed as the percentage of total Medicare beneficiaries the companies serve – less than a quarter of 50 million – rather than their share of the Medicare Advantage market, which would be a majority of 17.6 million beneficiaries.

Big Benefits

Cigna CEO David Cordani may have further hurt the possibility of the mergers going through when he commented that part of UnitedHealthcare’s success is due to the fact that it’s such a large company. What federal regulators want to hear is that consumers benefit from insurers being larger, not the company itself.

Supporters of the mergers have argued that combining the companies would reduce overhead and administrative costs and give them more negotiating power with providers and drug companies. In both cases, it’s assumed these savings would be passed on to consumers.

So, should we believe them? Do insurers really use cost-savings to benefit consumers?

Analysis from the Minnesota Star Tribune argues that UnitedHealthcare has the budgets to improve technology and back-office support that strive to make beneficiaries healthier. While these efforts can help members make better choices and stay on track with doctor visits, it also reduces costs for the insurer if their member pool is healthy. You could say it’s a win-win. However, federal regulators may be looking for a more clear-cut reduction in premiums and out-of-pocket costs for consumers.