Two of the state’s largest health insurers made their case to state regulators Monday about why they’d be better off merged into one company.
Aetna and Humana’s top argument to the Office of Insurance Regulation: Uniting would create an estimated $1.25 billion in cost savings over time, money which would lead to better benefits and new programs for their customers — including as many as three million Floridians.
Since the merger was announced this summer, questions have been raised about how customers’ out-of-pocket costs could change. In short, with all those cost savings, will Aetna and Humana customers see their insurance costs actually go down?
“It’s important to note that reducing the cost is sort of relative because we also have this medical trend that continues every year,” Aetna Executive Vice President Fran Soistman said. “So I like to think of the cost savings as mitigating what otherwise would be a higher increase.”
$1.25 billion is the estimated cost savings the merger would create over time
A study two years ago into a merger between UnitedHealth Group and Sierra Health Services found that insurance premiums rose by almost 14 percent.
At issue are a couple factors, one of which Soitsman pointed to, that healthcare costs tend to increase every year. Even with a larger share of the insurance market after they merge, an economist hired by Aetna and Humana said the insurers will still face serious competition.
But Deputy Insurance Commissioner Rich Robleto also said there is concern that investors in the newly merged Aetna could be prioritized over the people who pay insurance premiums in Florida.
I think our shareholders would expect us to take care of our customers first. Without taking care of our customers, nothing else is possible.
Aetna Executive Vice President Fran Soistman
Soitsman said he didn’t see that as a problem.
“I think our shareholders would expect us to take care of our customers first,” he said. “Without taking care of our customers, nothing else is possible.”
Insurance regulators in Florida and other states have a say in approving the merger. Amy Bogner, a spokeswoman for the Office of Insurance Regulation said she expects a decision in Florida to be made “as expeditiously as possible while also taking into consideration information and testimony provided.”
State law says that OIR has 90 days to rule from the time an application is complete. Right now, it’s still considered “pending and under review,” Bogner said.
Times staff writer Kathleen McGrory contributed to this report. Contact Michael Auslen at firstname.lastname@example.org. Follow @MichaelAuslen