Why Obamacare may be behind the M&A bonanza

An acute case of merger and acquisition fever appears to be afflicting the health insurers, with deal talk among the five big providers running rampant. And according to one attorney with deep experience in health-care merger activity, Obamacare is a prime driver behind the potential insurer tie-ups.

Obamacare "definitely encourages people to look at mergers," said Larissa Bergin of McGuireWoods, who has helped both hospitals and health-care providers to determine whether or not to move forward with M&A action.

Bergin notes that the HealthCare.gov marketplace allows customers to easily compare different plans in detail, which increases competition among insurance providers.

"By having that comparison there, it becomes just like shopping for anything else. That means greater competition, and that's one of the catalysts for looking at M&A opportunities," Bergin told CNBC.

The Supreme Court is soon to hand down a ruling on the Affordable Care Act's insurance subsidies in King v. Burwell this month, in what could be a severe blow to the law. The potential impact on health care M&A remains unclear.

Jeffrey Yoo, equity analyst at S&P Capital IQ, says that Obamacare is not the main factor driving the M&A talk but it does encourage insurance companies to streamline operations.

"These companies are clearly benefiting from Obamacare, and the better-than-expected number of people signing up is enticing them as well," Yoo said. As more individuals have purchased insurance, "they've grown revenues, but margins have stayed flat—and now looking for a way to grow margins."

Acquiring other companies in order to create synergies, such as what Anthem insists would be created in an acquisition of Cigna (in this case, $2 billion worth), is one obvious way to grow margins in such an environment.

Read More 'Frustrated' Anthem makes new offer to Cigna as Aetna moves in on Humana

Pediatrician Lanre Falusi examines an infant's ear in an exam room at a Community Clinic Inc. health center in Takoma Park, Maryland.
Andrew Harrer | Bloomberg | Getty Images
Pediatrician Lanre Falusi examines an infant's ear in an exam room at a Community Clinic Inc. health center in Takoma Park, Maryland.

Of course, whether the federal government will actually allow the deals to go through is a separate question. Investors needn't think that the enhanced oversight of health insurance companies will make the Federal Trade Commission and the Justice Department, which jointly enforce antitrust laws, any more willing to permit consumer-option-constraining mergers.

"I don't think the regulatory oversight of the Affordable Care Act impacts whether the FTC allows a deal to go through," Bergin said. "They are supposed to help generate continued competition and lower prices for customers regardless."

Obamacare "just encourages companies to look at mergers—it doesn't necessarily aid the passing of the merger," Bergin said, in a sentiment echoed by other health care M&A attorneys.

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