401kRollover Blog

After Friday’s announcement of the proposed merger between two major U.S. healthcare companies, Anthem and Cigna, they subsequently lost a combined $3 billion from their stock value. U.S. citizens will soon have only 3 options with regard to their healthcare insurance as Anthem have agreed to pay $54 billion for Cigna, in a move they hope will cut costs. The new Anthem-Cigna business will become the largest healthcare company in U.S. history, and comes only weeks after Aetna agreed a similar move for Humana at $37 billion. If approved by regulators, these two mega-deals will completely alter the U.S. healthcare industry.

Forrest analyst Alex Curran commented there was now “huge pressure” on the industry to cut costs, and this has led to a change of approach by healthcare companies, adding that “firms are now competing to be the ‘Amazon’ of the healthcare sector.” Forced by the Obamacare policy, companies could no longer exclude new applicants with pre-existing health conditions and had to allow young people to remain on their parents’ plans until aged 26. Thus, ‘marketplaces’ have emerged – websites that appear similar to online shopping or travel sites, where you can compare prices.

The U.S. spent $2.5 trillion (equivalent to 17.4% of GDP) on healthcare in 2013. In 2000, healthcare costs were, per capita, $4,129 – in 2013, this figure had risen to $7,826. If, like many, you believe Obamacare, and the fallout created from it, to be more failure than success, please Like & Share this post.