The Wall Street Journal set off a stock trading frenzy Thursday by reporting rumors that Woonsocket, Rhode Island-based CVS Corp. is offering about $60 billion to acquire Hartford, Connecticut-based Aetna Inc.
A sentimental insurance agent or broker’s immediate reaction to the news of the CVS-Aetna deal rumors might be: How sad.
Aetna is not the biggest major medical players, but it’s probably the best known. Aetna has been in business since 1853, and it’s been offering health insurance since 1899. When members of the Supreme Court were debating a federal employee benefits law case in March, and they were hunting around for the name of an insurance company to use in a hypothetical example, they talked about Aetna.
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But time marches forward, and the traditional commercial major medical is now a tough market, plagued by unpredictable policy moves in Washington.
Just 15 years ago, the picture was different. Big major medical insurers were recovering from the dark days of the old Medicare managed care program meltdown and class-action lawsuit attacks on the insurers’ medical care management operations. The big insurers were happy with their profits, and growing opportunities in the Medicare plan and managed Medicaid plan markets. They were selling their pharmacy benefit manager (PBM) units to other companies, and buying PBM services from companies like Express Scripts Inc. and Caremark, a company now that’s now part of CVS and has helped turn CVS into a PBM giant.
UnitedHealth Group Inc. broke the mold in 2005, by acquiring PacifiCare, the parent of a large PBM, Prescription Solutions.
In recent years, however, some insurers have run into conflicts with outside PBMs.
Anthem Inc. recently announced that it will be breaking up with its PBM, Express Scripts, and starting its own PBM, IngenioRx, with help from a five-year agreement with CVS.
Now, CVS could take another approach to reuniting health insurance and PBM, by becoming a health insurer itself.
Here’s a look at three ways that kind of deal could affect insurance agents and brokers.
2. Executives at the big insurers might have even less time to think about you.
The Affordable Care Act changes in the individual major medical market have been a distraction for the big health insurers for years, now, and the opportunities in the Medicare plan and managed Medicaid markets have taken away even more of the big health insurers’ attention.
Executives at the big, publicly traded health insurers tend to avoid using terms such as “agent,” “broker,” “distributor,” or even “insurance” during their quarterly conference calls with securities analysts.