Consolidation in the health insurance industry holds both positives and negatives for employer-sponsored health plans, but employers shouldn’t expect to see any potential savings resulting from the Aetna-Humana merger until at least 2017, say industry experts.

“The real impact of this will be in the Medicare Advantage space and the ability to negotiate better pricing with providers,” says Tucker Sharp, global chief broking officer with Aon Health.

An Aetna-Humana merger, if approved, would place the newly merged company ahead of UnitedHealthcare, the current leader in the Medicare Advantage market, says Sharp.

“That was the strategic play that had Aetna interested in Humana,” says Sharp. “Humana does have a commercial business as well, but the real jewel in the crown was the government business.”

In general, employers “are using health plans as their agents to drive down health care costs and they’re doing that in a number of ways, one of which is [through] insurance companies getting discounts from providers,” says Paul Fronstin, director, health research and education program at the Employee Benefit Research Institute in Washington, D.C. “The larger the insurer, the better competitive discount they might be able to get if they’re driving more volume to providers. ... And that should trickle down to employers in the rates that are being paid through both fully insured and self-insured plans.”

Also see: Aetna agrees to buy Humana for $37B in cash, stock

On the downside, though, fewer insurance companies could mean less competition. “That’s something that may affect smaller employers more than larger employers because the larger employers are self-insuring and they’re essentially paying a flat percentage to the carrier to administer the plan,” says Fronstin.

The reality for employers, however, is likely somewhere in the middle, believes Sharp.

“In the short term, I don’t think there’s going to be much of an impact. The merger is expected to be closing in the second half of 2016 so there will be no price benefits in 2015 or 2016. The first implications will be in 2017 for employers,” he says. “So then you have to decide: Do you bet that Aetna’s going to be able to negotiate better discounts with the hospitals and physicians and then pass them on to employers? Or are they going to negotiate better discounts and pass them on to shareholders? And I think they will do a bit of both.”

Brian Marcotte, president and CEO of the National Business Group on Health, which represents large employers, believes the merger presents an opportunity for the “rebalancing of purchasing leverage with a health care provider community that has gone through rapid consolidation over the last several years. There’s an opportunity to move to new payment models in an industry that has become way too fragmented.”

He acknowledges, however, that too much consolidation could have negative consequences for employers. “Is there a risk of less competition, innovation and fewer contracting options for large employers?” he says. “At what point does insurer consolidation reach a tipping point where the potential downside outweighs potential opportunities? And I’m not sure of the answer to that at this point.”

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