A pair of large-scale mergers is likely to dominate the conversationin the healthcare community this earnings season, as analysts and investors grapplewith the broader implications of consolidation within the insurance space.

The second quarter marks nearly a year since and Aetna Inc. struck separate multibillion-dollar deals to broadentheir reach and reactto the demands of the post-Affordable Care Act insurance landscape. In the process,they have also touched off a high-stakes debate over the mergers' competitive impactin markets across the nation, drawing scrutinyfrom both individual states and the federal government.

In one dealAnthem, already the country's second-largest health insurer, plans to acquire for $48.09 billion. Aetna,meanwhile, is looking to buyHumana Inc. for $35.47 billion.The companies have contended that the mergers would reduce consumers' healthcarecosts by creating more efficiencies and giving them more leverage over providersand drug makers. The consolidation could also affect competition within the industry,analysts said, creating market concentrationissues that represent major obstacles in winning antitrust approvalfrom the U.S. Department of Justice.

That uncertainty has loomed over the health insurance industryand in recent weeks prompted more investors to hedge their bets.

Humana's stock dropped more than 10% following a July 7 reportthat the Justice Department may rule against its planned merger. Aetna saw nearlyall of its 8.95% second-quarter gains erased over the same period. Anthem and Cignaalso posted negative returns of 5.05% and 6.74%, respectively, during the secondquarter. The SNL U.S. Managed Care Index rose 4.53% during the same period.

"Most people believe that [they're] not going to go through,"S&P Global Market Intelligence analyst Jeffrey Loo said of the deals, addingthat even if they are approved, the companies might be required to divest assets."If Aetna sheds a good portion of the Medicare Advantage members, the DOJ mightagree to that."

Leerink Partners analyst Ana Gupte was similarly skeptical ofAnthem's planned deal for Cigna, saying in a note to clients that the chances areslim it will pass federal review. Given those doubts, perhaps one of the centralquestions insurers could face during second-quarter earnings is where they willstand if the deals fall apart.

Cigna and Aetna are generally seen as the best-positioned inthat scenario, according to analysts. Cigna could collect a $1.85 billion break-upfee if its merger falls through, which Gupte predicted it could put toward sharerepurchases or even an acquisition of its own. WellCare Health Plans Inc. and Molina could be attractivetargets for the company, she said, as a way to build out its presence in the government-sponsoredhealth sectors.

Aetna would appear to have fewer immediate challenges as a stand-alonecompany compared to its peers.

"They have fewer problems that they were trying to solvethrough the Humana transaction, than I believe Anthem had that they were tryingto solve in first going after Humana and then buying Cigna," Mizuho Securitiesanalyst Sheryl Skolnick said.

Speculation over the M&A fallout could also play a significantrole in analysts and investors' evaluation of smaller insurers such as WellCareand Centene Corp. Bothcompanies are seen as contendersfor Aetna's Medicare Advantage portfolio if regulators require Aetna to sell itas part of its planned merger, which would add an estimated 350,000 patients toits membership rolls.

The one health insurer likely to float above the M&A-fueledfray, though, is industry giant UnitedHealthGroup Inc. The company has steered clear of the large-scale consolidationso far, instead focusing on reshuffling its priorities internally. UnitedHealthhas filed plans to exit26 of 34 state exchanges in 2017, after it lost nearly $900 million over two years.The insurer expects to lose another $650 million on the exchanges in 2016, whichLoo said could prompt questions about its plans for the states that it opted toremain in.

UnitedHealth's broader shift toward focusing more on noninsuranceunit Optum could also receive some attention, as the division drives a greater percentageof its profits. Analysts expect the company to report solid earnings across allof its businesses in the second quarter, offering what Skolnick called an alternativeto the unpredictability surrounding much of the rest of the sector.

"United can make hay while the sun shines and can take advantageof any dislocation or distraction on the part of its competitors," she said.