The world of health insurance has been marked by consolidation for years now. It is generally true that antitrust issues arise when there become only two or three choices. The reality is that Affordable Care Act, also called Obamacare, has created a climate in which about the only way for health insurers to really mitigate their risks is to end up with insurance client blocks that are so large that they can fend off the risks of just a few cases hurting their operating profits.

It is very possible that regulators and consumers might not see eye to eye on the matter of mergers. Unfortunately, this may be what insurance carriers have to do in order to assure their survival.

The U.S. Department of Justice is now said to be set to give a very close review of any of the proposed mergers of the top health insurance players in America. Of concern is whether the proposed consolidation will harm competition.

What needs to be considered is that Anthem Inc. (NYSE: ANTM), known by Blue Cross to most of the public, has already made public its $47.5 billion buyout offer of Cigna Corp. (NYSE: CI). So far, Cigna is fighting the deal, and may be that Cigna is interested in a deal with Humana Inc. (NYSE: HUM).

Aetna Inc. (NYSE: AET) already has made its merger intentions clear on a buyout of Humana. UnitedHealth Group Inc. (NYSE: UNH) is also believed to be interested in buying Aetna. UnitedHealth is already the largest health insurance provider, and it has rolled up more companies than can easily be counted.

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Now, if anyone is worried about antitrust issues and dominance, take a look at the market cap and the 2014 net revenues of each company below:

• UnitedHealth has a $116.7 billion market cap and generated $130.4 billion in revenue.
• Aetna has a $45.0 billion market cap and generated $58.0 billion in revenue.
• Humana has a $28.8 billion market cap and generated $48.5 billion in revenue.
• Cigna has a $42.5 billion market cap and generated $34.9 billion in revenue.
• Anthem has a $43.5 billion market cap and generated $73.8 billion in revenue.

The headline risk is having a marginal impact, but much of the drop on Monday may really be tied to Greece and Puerto Rico default risks that roiled the overseas markets. UnitedHealth was down 0.6% at $122.51, while Aetna was down just shy of 1% at $128.80. Humana was last seen down by 2.1% at $191.35, while Cigna was down 1.7% at $165.20 and Anthem was down only 0.3% at $164.20.

What investors need to consider is that there is also an election in 2016. That will mean a regime change, regardless of which party wins the elections, and that means there may be a different Justice Department mandate from the new powers that be. If mergers are blocked today, the insurers may have a larger leg to stand on when the new portions of Affordable Care Act kick in.

What consumers have to consider now is that health insurers effectively have unlimited risks due to uncapped health care costs. Literally a few highly expensive annual cases can wipe out the profitability of companies. A few hundred to a few thousand cases that run into the millions of dollars for treatment can potentially crush the companies, if there are not allowed to consolidate.

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The end game is a bit complicated, and it may not sit well with much of the public. Even if the current Justice Department were to block these mergers, these proposed mergers may be summoned up again and may not get blocked by regulators after 2016. Eighteen months is just not that long for a company looking to position itself for the next 20 years.

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