Big Health Care Mergers Being Fueled by Obamacare Cash

Published July 6, 2015

Supersized health care companies, flush on Obamacare money, are in a merger frenzy as health insurers, hospitals and drug companies bulk up to take advantage of government spending in Obamacare exchanges, state Medicaid programs and Medicare Advantage for the baby boomers, says The Los Angeles Times.

The latest billion-dollar deal occurred last week when Medicaid insurer Centene Corp. bought Woodland Hills insurer Health Net Inc. for $6.8 billion.

And more billion-dollar deals are predicted as big health insurers shop for companies that boost their government business.

The Times quoted Gerald Kominski, director of the UCLA Center for Health Policy Research, saying, “The Affordable Care Act is really driving this merger mania. There are billions of dollars pouring into the system, and it’s money to buy insurance. It’s not entirely clear the savings get passed on to consumers.”

This is the biggest expansion of insurance coverage in half a century, lifting stock prices and revenues across the health care industry, thanks to Obamacare.

The Supreme Court ruling last week keeps, also helps big health care companies because it keeps the money spigot turned on by upholding the premium subsidies that millions of Americans now rely on to pay for health insurance.

Over the next decade, the federal government is expected to spend $1.2 trillion on subsidies and other aspects of Obamacare.

Since September 2013 nearly 17 million Americans have gained health insurance, and billions of dollars in uncompensated care has been wiped out for hospitals that are seeing more paying patients.

But some regulators and consumer advocates are worried about increasing consolidation. They fear the nation’s $3-trillion health care tab will keep growing uncontrollably, consuming government budgets and getting into the pocketbooks of everyday Americans.

The Times quoted Glenn Melnick, a health care economist and professor at the University of Southern California, saying, “We cannot afford what we are paying now. Health care could eat up the federal budget.”