With Merging of Insurers, Questions for Patients About Costs and Innovation

The nation’s five largest health insurance companies are circling one another like hungry lions closing in on prey.

On Friday, Aetna said it would acquire its smaller rival Humana to create a company with combined revenues of $115 billion this year. Anthem is stalking Cigna. UnitedHealth Group, now the largest of the five, is looking at its options. At the end of the maneuverings, three national behemoths are likely to emerge.

There is also a scramble among the smaller insurers. On Thursday, Centene, which specializes in offering Medicaid coverage, said it planned to buy Health Net, a for-profit insurer with headquarters in Los Angeles.

As insurers grow larger, will consumers benefit from the companies’ ability to bargain with hospitals and doctors for lower prices? Will diminishing competition translate to fewer choices of plans? And what effect will mergers have on innovation in health care?

The answers depend largely on how successfully the other insurers, particularly those that were created or attracted by the Affordable Care Act, can compete with these much larger companies.

“All politics are local,” the saying goes, and it is similarly so with insurance companies.

The big (and getting bigger) for-profit companies — which make most of their revenue from employer and Medicare and Medicaid plans — still face significant competition from the regional or state-based nonprofit Blue Cross and Blue Shield plans, particularly in the market for employer-based coverage.

“What people miss is the regional strength of regional Blue Cross plans,” said Paul H. Keckley, the managing director for the Navigant Center for Healthcare Research and Policy Analysis.

Blue Cross Blue Shield plans, including the for-profit versions owned by Anthem in 14 states, have traditionally dominated the markets for individuals and employers. In more than 30 states, a nonprofit Blue Cross sells the most policies to large employers, with almost a dozen capturing three-quarters of the market, according to 2013 data from the Kaiser Family Foundation, the latest information it has compiled.