Aetna-CVS: Is health’s biggest deal good for consumers?

Analysts are calling it the biggest health insurance deal of all time, but the debate is only beginning about the consumer impact of a $69 billion merger announced by insurer Aetna and pharmacy giant CVS.

Nobody disputes it is a heavyweight combination of national companies with large Florida footprints.

The pharmacy chain, which has 10,000 U.S. locations including 12 in West Palm Beach alone, would join forces with one of the nation’s biggest insurers, particularly strong in employer health plans.

It will make health care “easier to use and less expensive for consumers,” CVS Health President and CEO Larry J. Merlo said. Company officials painted the picture of a one-stop source for primary medical care, testing for conditions like high blood pressure and diabetes, and getting prescriptions filled, all under one roof.

Skeptics were not sure all the rosy talk was likely to translate to lower premiums or drug costs for customers.

“Looks to us like this corporate merger is more about higher profits for shareholders than lower prices for patients,” said Ben Wakana, executive director of the advocacy group Patients For Affordable Drugs.

A selling point for some mergers is creating greater efficiency, sometimes through job reductions, though it is not clear how much that would apply to two companies that have historically performed different roles in the health marketplace. CVS alone has more than 20,500 employees in Florida.

“We have no announcement about any job consolidations,” CVS spokesman Mike DeAngelis said Monday.

Competing health insurers have tried to make themselves more accessible in brick-and-mortar locations, such as Florida Blue’s customer help centers in locations including Boynton Beach. But those storefronts aim to help with insurance, not provide health products or services on the spot.

The best-case scenario for consumers: It costs less for Aetna to cover many of its customers at retail locations in the same corporate family, and the savings get passed along to customers, said Eric Wilson, a health insurance broker based near Chicago.

“This could bring the costs down for everybody,” Wilson said.

But that remains to be seen, he said. Another possible outcome is simply “one player getting a bigger piece of a market that’s exploding,” while consumer savings remain elusive as drug prices and other expenses continue to rise.

Some observers see the advertised Aetna-CVS consumer benefits as “nebulous,” not obviously much different than what consumers can already get in a wide range of places. The deal is really “driven by the desire to fend off scary new competitors in the healthcare industry, such as Amazon and Wal-Mart,” asserted Los Angeles Times columnist Michael Hiltzik.

Amazon has been securing permission to distribute prescription drugs in a dozen states, with Florida not yet among them, according to published reports.

CVS’s Merlo didn’t mention the potential competition in a statement Sunday, but said, “This combination brings together the expertise of two great companies to remake the consumer health care experience.”

CVS says it pharmacy locations will include “space for wellness, clinical and pharmacy services, vision, hearing, nutrition, beauty, and medical equipment, in addition to the products and services our customers currently enjoy.”

The stores will serve as a “community-based health hub dedicated to connecting the pathways needed to improve health and answering patients’ questions about their health conditions, as well as prescription drugs and health coverage,” the companies said in a joint release.

Aetna’s ill-fated merger with insurer Humana ran into government challenges on the grounds it could reduce consumer choices. This plan would still need shareholder and regulatory approvals, though it is not clear if it would face the same antitrust scrutiny as the union of two big insurers.

A key question could arise on drug prices: whether more control of the drug supply chain — the middlemen between the manufacturer and consumer — adds up to good news for consumers or just more control of profits for the combined concern.

“This is the next step in our journey, positioning the combined company to dramatically further empower consumers,” said Mark T. Bertolini, Aetna chairman and CEO.

 

 

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