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.