Health insurers have announced a flurry of small acquisitions in the past three months.
At a high level, the health insurance mergers and acquisitions market has been so quiet that analysts at Moody’s did not bother to include a discussion of M&A activity in their latest health care quarterly publication.
But, down in the weeds, insurers have been making deals to equip themselves for a world reshaped by the Patient Protection and Affordable Care Act of 2010 (PPACA).
See also: PPACA open enrollment 2015: Popcorn time
One reason for a lack of big insurer-insurer M&A announcements may be PPACA itself: Carriers may want to know what 2014 claims experience really looked like, and how the PPACA “three R’s” risk-management programs — the reinsurance, risk-adjustment and risk corridors programs — will really work before trying to acquire something with a value that policymakers might soon re-set.
But several of the recent deals that have been announced reflect insurer’s efforts to respond to PPACA incentives to focus more on cutting the cost of managing the care of poor people and sick people, rather than holding claims down by using medical underwriting to reduce the initial level of morbidity risk.
Another high-profile deal involves exchange technology.
One might be a traditional market-expansion deal but comes with an only-in-PPACA World wrinkle.
To learn more about recent health insurer deals, read on.
Buyer: Anthem Inc. (NYSE:ANTM)
Bought: Simply Healthcare Holdings Inc.
Price: Not disclosed.
Why? The government plan market.
Simply Healthcare is an insurer that runs Medicare and Medicaid plans in South Florida, with 170,000 Medicaid enrollees and 22,000 Medicare enrollees. It also offers the Clear Health Alliance, an HIV/AIDS special needs plan with 9,000 enrollees.
Anthem already has 500,000 Medicare and Medicaid plan enrollees in Florida, but a majority are in central Florida.
Joseph Swedish, the president of Anthem said the deal “aligns with Anthem’s strategy for continued growth in our government business division.”