Still, large employers are pushing for new models to reign in health costs and improve care. Amazon, Berkshire Hathaway and J.P. Morgan have joined together to create a firm, which will try to reduce costs and improve care for their combined workforces of 1 million people.
Three years ago, when four of the major health insurers rushed to partner on large-scale mergers, the deals were blocked by the Department of Justice, and ultimately rejected by the courts on anti-trust grounds.
Analysts say the CVS-Aetna and Cigna-Express Scripts deals are different, because they are not mergers of rivals but rather vertical deals which would not result in fewer competitors in the medical or pharmacy benefit markets.
“On the anti-trust side I don’t see huge issues… with any of these three vertical mergers,” said Garthwaite, though he added that integrated medical pharmacy benefits firms could make it harder for new standalone entrants.
“If the barrier to entry is that everyone really likes having their insurer and their provider integrated together that it creates a much more attractive insurance class, then we should allow that activity to happen and we should regulate it,” he explained.
“It shouldn’t be that we say we’re not going to allow a good product to emerge because we’re afraid,” Garthwaite added.
Last month, the department of justice asked CVS and Aetna extended its review of the merger, asking the companies for more information. The firms still expect the deal to be approved in the second half of the year.
Even if regulators sign off on the deals, there are risks to execution for both Walmart and CVS, as they try to integrate health insurance, pharmacy and primary care services at such a large scale.
But Mercer’s Watts says even if the deals aren’t realized, health care firms are clearly searching for a model that will provide more value and better care for consumers.
“The fact that people gravitate to how much better something could be in some of these partnerships – I think that’s good. I think that in the long term that’s good for health care delivery,” Watts said.
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