The market often works in mysterious ways, then it can turn into the wild west when it comes to raw speculation. It turns out that speculators love guessing about mergers. Now we are in a sort of speculation soup about which of the health insurance providers are going to merge.
24/7 Wall St. cannot help but wonder if it is possible that one of these top companies could be left without a merger partner. Mergers among insurance providers are an unintended consequence of the Affordable Care Act. It seems as though the insurance giants have figured out that the only way they can shield themselves from unlimited liability is to make sure that they have so many insured people as members that they simply cannot fail. With all the merger speculation in health care insurance right now, is it possible that one player, or even two players, could be left out in the cold when it comes to mergers?
Anthem Inc. (NYSE: ANTM) is reportedly the one that approached Cigna Corp. (NYSE: CI) about a merger. Anthem is also one of the companies that was speculated about as one of the parties interested in Humana Inc. (NYSE: HUM) as well. And on Tuesday came word that UnitedHealth Group Inc. (NYSE: UNH) is now interested in acquiring Aetna Inc. (NYSE: AET). And UnitedHealth is big enough to acquire any company in the field. The reality is that any of the larger companies could try to make a grab for the smaller insurance giants.
If you didn’t know any better about the industry, it almost sounds like an insurance orgy. It isn’t. It is how these companies are planning to survive under the Affordable Care Act. As a reminder, insurance companies were the most targeted sector of health care under Obamacare. The end result sure looks as if none of the players want to be left out. You could literally be looking at an insurance sector that is down to three or so major carriers in each market ahead.