Can the affordable care act provisions explain the recent wave of acquisitions in the health insurance industry?

ABSTRACT

This research shows that the ACA health insurance exchanges have generated more merger activity in the health insurance market. The impact is robust to control for an extensive set of factors suggested by both neoclassical and behavioural frameworks. The economic impact of this ACA provision is substantial with 3.8 more months of unusually high merger activity or 52 more merger bids per year.

KEYWORDS:

• Merger & acquisition
• neoclassical hypothesis
• behavioral hypothesis
• affordable care act
• health insurance market

JEL CLASSIFICATION:

• G34
• L52

Disclosure statement

No potential conflict of interest was reported by the authors.