January proves rough on plans for health insurance megamergers as two deals appear to be hitting barriers. The proposed union of Aetna and Humana has been blocked by a federal judge as being likely to reduce competition substantially. According to the Justice Department, less competition would lead to higher prices and lower quality. The merger of Anthem with smaller rival Cigna is expected to undergo a similar fate in court this month, prompting Anthem to push back its merger end date to April.
Given that the health insurance industry already has below-average customer satisfaction compared with all sectors and industries in the American Customer Satisfaction Index structure, it seems unlikely that more consolidation would give consumers the quality of service they crave. On a 100-point scale, the industry scores 72, which lags well behind the national ACSI average of 75.4 (as of Q3 2016).
Of the two mergers that are running into roadblocks in 2017, neither would bring together high-scoring entities. The health insurance leaders in 2016, Aetna and Anthem, would both be combining with companies that score at or below the industry average. For Anthem, Cigna would likely be a significant drag on policyholder satisfaction as the latter scores rock bottom for a second consecutive year. Cigna, despite its large year-over-year gain, still ranks in the lower 40 among 300+ companies in the Index.