Monday, Oct 15, 2018
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Why CVS-Aetna is good

  • CVS-Aetna-Acquisition-1-1

    CVS has announced it will merge with Aetna


  • CVS-Aetna-Acquisition-2

    Aetna will merge with CVS in the coming weeks.



One of the world’s biggest drugstore companies, CVS, is set to merge with one of the world’s biggest health insurance providers, Aetna. Assuming government regulators and both companies’ shareholders give it their blessing, it would be the biggest merger in the U.S. this year.

So, will it, on balance, be good for consumers and for health care?

Even for someone not insured by Aetna, it should be good news. 

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The CVS-Aetna merger brings health insurance and healthcare closer together than they have ever been before in this country. Drugstores are not CVS’ only business — in 2006, it acquired a company called MinuteClinic, which operates walk-in clinics. There are now more than 1,000 MinuteClinics. This is how CVS and Aetna, by joining forces, could save themselves, and millions of Americans, a lot of time and money — by enabling health-care consumers to skip the high-cost doctor visit when a CVS-owned walk-in clinic can perform the same function.

Patients with chronic conditions stand to benefit the most. Frequent trips to the doctor are hugely expensive under the U.S. health-care system at present, but for routine check-ins, chronic patients could receive the same treatment at a walk-in clinic as they would get at a doctor’s office. Less expensive visits could mean more visits — for example, to ensure patients are taking their medication as directed — lowering insurance costs for all who are covered under Aetna.

If this model of care takes off, others could imitate it, prompting more mergers and more cohesion in the industry overall. Add to this equation the almost-trillion dollar giant Amazon entering the pharmacy market. If CVS buys up an insurance company and the model is profitable for them, why wouldn’t Amazon do the same thing?

Imagine one result of this paradigm shift as this: players in the insurance and care markets with enough market power to negotiate prices with drug companies.

That, admittedly, is still a remote scenario. But the astronomical prices of drugs in the United States are a major reason our health care is so expensive. In our fragmented health-care market, there are no major providers powerful enough to meaningfully negotiate those prices down. More integration of the insurance and care markets should be a step in the right direction.

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