Here’s what the industry change means for you
by Jean Chatzky
Among the recent financial headlines of Bitcoin trading and market highs, you probably caught sight of the news that CVS Health plans to buy health insurer Aetna for approximately $69 billion. This one has the potential to impact far more individuals, which is why we thought we’d dive into it this week. Here’s the rundown of what’s happening, when it’s happening and why it’s happening — as well as what it likely means for you.
CVS Health isn’t just a chain of brick-and-mortar pharmacies. The company also has a “pharmacy benefits” arm that negotiates cheaper prescriptions from drug manufacturers on behalf of health plans and beneficiaries. Combine this aspect of the company with Aetna’s health insurance plans, and what you get as a result is a hybrid that can together set a goal of keeping customers out of the hospital, which would save the company money because it would end up footing those bills. Think about it this way: If someone with asthma didn’t receive their inhaler refill on time or wasn’t told how to use it properly, that person could end up taking a trip to the emergency room. To avoid this scenario, the company could take steps to make sure refills didn’t fall through the cracks (even if that meant reminding patients) or increase the number of in-store “MinuteClinics” where patients could receive care more inexpensively than if they went to the hospital. Aetna might also offer plan participants incentives — like lower co-pays — to visit these clinics over traditional doctors’ offices.
Profit is the motive here — and staying competitive. Amazon recently disrupted the grocery industry with its purchase of Whole Foods. Its specialty is seen as making other industries cheaper and more efficient. Now, the company is making noise about getting into the business of pharmaceuticals, and that has the healthcare industry — which is already widely viewed as “very expensive” and “messy” — worried, says David E. Williams, president of Health Business Group. CVS and Aetna want to move before the Amazon brings the likes of one-click ordering to the pharmaceutical business.
Large mergers always need the green light from the Federal Trade Commission (FTC) before they pass. (That’s in order to make sure they don’t violate antitrust laws.) This deal is expected to close in the second half of 2018, according to CVS Health. After that, it could be a year or two before consumers see significant changes, says Williams.
The “rosy view” — and CVS Health and Aetna’s take — is that savings that will lower overall healthcare costs and consumer insurance premiums, says Amanda Starc, associate professor at Northwestern’s Kellogg School of Management. On the other hand, the newly consolidated company could keep savings on its own balance sheet and make market competition difficult. As for the upshot? There have been quite a few attempted mergers and acquisitions in the healthcare industry over the last few years, but because of antitrust laws, some haven’t been approved. The coming year could mean some reshuffling as companies propose new mergers to the FTC.
What to Do Now:
Since it’ll likely be some time before consumers see any significant changes post-merger, here are some ways to save in the meantime. First, keep an eye on the news and on your premiums. Mark your calendar for November 1, 2018 (the first day of the next Open Enrollment period), and shop around to compare new plan prices. To save on prescriptions, know that prices vary more than you’d expect from pharmacy to pharmacy. Use a tool like GoodRx.com to compare prescription prices at different locations, and before you visit a pharmacy, do a quick online search for “coupon” and the name of the drug. Warehouse store pharmacies like Costco and Sam’s Club are also often money-savers, and since federal law prohibits pharmacies from having membership-only access, you can shop there even if you’re not a member.
With Hayden Field