CVS Health and Aetna deal could drive health care costs down

Migration towards quick clinic service would reduce claims costs, says expert

CVS Health and Aetna deal could drive health care costs down

Insurance News

By Bethan Moorcraft

The US healthcare system is on the brink of a massive shake-up following the announcement that retail pharmacy company CVS Health is buying one of the largest health insurers in the country.

CVS Health revealed on Sunday (December 03) that it will buy Aetna in a $69 billion acquisition ($77 billion including debt), subject to approval by antitrust regulators. CVS CEO Larry Merlo said the deal would allow CVS to expand the services offered in its MinuteClinic walk-in health clinics.

What does this monumental deal mean for US health care in terms of costs, insurance and the future of the industry? Insurance Business spoke to Eric Wilson, principal of health care insurance company Wilson Associates, about the possible impacts of the acquisition.

“This deal could help to drive health care costs down in the US,” he said. “Generally, if you go and see someone at a CVS quick clinic, or a similar type of health clinic, it will cost less than a trip to your doctor. If people start migrating towards those clinics, that could bring the cost of health care claims down.

“These days, we tend to see a lot of people opting for urgent care or emergency care services because it can take days to set up an appointment with a doctor. A quick clinic, like those run by CVS Health, is open most of the time, so we might see a migration towards quick clinic service rather than the emergency room. This would also bring claims costs down.”

CVS Health is not the first company to go down this road. Kaiser Permanente has a similar system that requires its health insurance policyholders to visit a specified Kaiser center for medical care. UnitedHealthcare also tried a similar move with Harken Health, where they built specified Harken Health centers.

The difference is, whereas those examples had to build the infrastructure and hire people, CVS Health already has everything necessary in place. Approximately 70% of Americans live within three miles of a CVS pharmacy or quick clinic. The deal “simplifies people’s access to health care”, Wilson explained. 

There has been discussion around whether the CVS and Aetna acquisition could lead to cheaper drug prices in the US. Wilson described that as a “question mark” at the moment.

“In theory, Aetna could start to charge less for drugs because this partnership will eliminate the need for a third-party administer, or middle-man, to administer drug costs. CVS will now administer their drug plan, so that could bring drug costs down,” he said. “However, the drug companies in the US can be quite aggressive, so it’s tough to tell.”  

Others have said this acquisition could be to the detriment of large hospital operators. Wilson disagreed with this, telling Insurance Business: “If anything, it could stabilize things. One problem our hospitals have is the amount of free or uncompensated care they’re giving to people without insurance or to people who are using the emergency room as their primary care center. This deal could lead to a migration towards CVS Health clinics, which could reduce some pressure on the hospitals.”


Related stories:
CVS Health completes acquisition of Aetna
Aetna hit with class action threat
 

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