The tsunami of mergers announced last month – Aetna’s purchase of Humana and Anthem’s purchase of Cigna – is expected to transform the health insurance industry, if the deals survive antitrust scrutiny by regulators.
The consolidation will create three national giants, including UnitedHealth Group Inc., each with more than $100 billion in annual revenue, and add to the pressure on smaller Blue Cross-Blue Shield operators to merge.
But don’t count Independence Blue Cross, Southeastern Pennsylvania’s largest health insurer and a major Philadelphia Center City employer, among those on the ropes.
That’s partly because among merger partners, only Aetna has a big presence in the Philadelphia region, but also because Independence is big enough and has geographic and business diversity.
“We believe that we are of a size that if we continue to go it alone, we will be very successful, but we are very open to exploring strategic alliances, collaborations, and who knows what that means in terms of consolidations down the road,” Daniel J. Hilferty, chief executive of Philadelphia-based Independence, told the Philadelphia Inquirer.
Expert observers echoed Hilferty’s view.
“They have enough revenue and enough interrelationships that they are what I would consider a much more secure group,” said Peter L. Gualtieri, director of business development in the Philadelphia office of Savoy Associates, a health insurance agency in Florham Park, N.J.
Independence now has customers in 24 states, largely through its majority ownership of Philadelphia-based AmeriHealth Caritas, which competes nationally and is the nation’s seventh-largest manager of Medicaid health benefits.
Meanwhile, in its core Southeastern Pennsylvania territory, Aetna and other national competitors have eroded IBC’s once-overwhelming market share in the commercial health insurance market, but IBC still has 50 percent of the market – more than twice Aetna’s share, according to data from Decision Resources Group.
In South Jersey, Aetna is far larger than Independence subsidiary AmeriHealth Insurance Co. of New Jersey. But to gain ground, Independence sold 20 percent of AmeriHealth New Jersey to Cooper Health System and offered a plan with lower out-of-pocket costs for services at Cooper.
The Cooper plan was one of several Affordable Care Act initiatives that helped Independence return to growth in its commercial segment.
In 2014, 285,000 new individual customers gained coverage in Pennsylvania and New Jersey under Independence policies bought through the act’s online exchanges. Those policies propelled a 12 percent gain, to 2.35 million, in the number of people insured by Independence under commercial plans.
Date: August 24, 2015