20 Jun 3 questions advisers should ask about the potential CVS-Aetna deal
In a rapid changing market, stay ahead of the curve by asking these three questions on the potential CVS-Aetna deal to help determine how it will impact the health insurance industry.
The news that CVS has reportedly launched a $66 billion bid to buy Aetna shows that once unimaginable mergers are becoming the norm. But it also raises some important questions for brokers about the future of group benefits, and how to operate in a fast-moving and constantly changing landscape.
Here are three questions to ask when determining how this potential business deal will impact the employer-based health insurance market:
1) Will this move give Aetna a competitive advantage in the group space?
How are other carriers going to feel about having to compete with an insurer that has pharmacy data on the majority of Americans? Anthem may be at the top of the list with worries, as the company just last week announced that it will partner with CVS to launch its own pharmacy benefits manager called IngenioRx.
2) Are healthcare companies too focused on M&A?
A year ago, Aetna was trying to acquire Humana, and Anthem was trying to buy Cigna. Brokers everywhere were concerned about carrier consolidation and what a lack of competition would do to group prices. How have things pivoted to pharmacy so quickly?
The CVS deal may represent gains for both parties. The deal would give Aetna a new avenue for business growth, and CVS would gain some much needed ground against Amazon’s rumored entrance into the drug business.
But what does this emphasis on inorganic, M&A growth say about the healthcare industry? Healthcare consolidation has been a trend for years, but it hasn’t always worked in consumers’ favor, which could leave brokers wary of this deal.
3) Why should employers care?
What impact will this deal have on prescription prices for employers? Prescription drug costs are one of the largest drivers of employer healthcare spend, so the question is critical. Will Aetna and CVS be able to improve efficiencies and lower costs, or monopolize their group markets?
Another point of interest for employers is the possibility of narrowed prescription options. With narrowing provider networks becoming standard, this deal could result in limited consumer options when it comes to prescription drugs.
On the other hand, the deal could spark cost-saving changes in healthcare delivery. It’s not hard to imagine CVS augmenting their MinuteClinic operations with Aetna’s volume.
Employees might find they like having retail access to primary care at a lower price point, with after-hours service, easy-to book appointments, and pharmacy services built right in. This partnership may be the push retail healthcare needs to become a cornerstone of the primary care model.
Tolbert, B (22 June 2018) “3 questions advisers should ask about the potential CVS-Aetna deal” [Web Blog Post]. Retrieved from https://www.employeebenefitadviser.com/opinion/3-questions-advisers-should-ask-about-the-potential-cvs-aetna-merger