By JK WALL

The nation’s Big 5 health insurers have thrived under the Affordable Care Act, seeing their profits grow and their stock prices soar.

They also continue to dwarf their main sparring partners—hospital systems—in size. Consider that the largest health insurer, United Health Group, has annual revenue of $130 billion, while revenue at the largest hospital system, HCA, is a tick under $37 billion. The second-largest health insurer, Anthem Inc., has $74 billion in annual revenue, while the second-largest hospital system, Ascension, has $20 billion.

So why are health insurers so desperate to get bigger? Anthem has offered $47 billion to acquire Cigna Corp., and United, Humana and Aetna are all trying to counter with mega-deals of their own.

Well, it’s about economies of scale and all that—the Affordable Care Act and other changes are squeezing the amount of profit insurers can make per customer, even as the pool of paying customers is growing. Also, hospital systems, while still more fragmented than insurers, are consolidating, as are drug and device makers. So insurers want to boost their bargaining power.

But the real reason is population health.

“In order to do population management, you need populations,” Dhan Shapurji, a Deloitte consultant to health insurers, quipped in a phone call with me this week.

He was being a bit tongue-in-cheek, but he hit on the key word: “populations.”

It’s no longer enough just to have lots of members in your health plans—Anthem has 38.5 million; Cigna has 14.7 million.

To do population health, insurers must have a critical mass of people in local markets— otherwise why would health care providers enter population health-based contracts with them?

To do population health, insurers must have a critical mass of members in each of several high-cost diseases: diabetes, heart disease, cancer, behavioral health. Otherwise, it will be too expensive to hire the clinical staff to develop the necessary clinical protocols, to staff the high-touch patient intervention programs and to develop the data analytics and customer engagement technology seen as vital for doing effective population health on a large scale.

Just on the technology side, a recent Deloitte report calculated that the average Big 5 health insurer spent $554 million on any sort of capital spending—not just technology development—in 2012. That same year, Google alone spent $6.8 billion on research and development.

Since companies like Google are setting the standard for how today’s consumers want to interact digitally with services companies, it’s no wonder that Anthem CEO Joe Swedish has made a habit the past year of saying that, among health insurers’ customers, “frustration is pre-eminent and growing by virtue of the intolerance of health care’s inability to match the experiences in other aspects of our lives.”

“We intend to change this dynamic and our strategy is to create an improved customer experience as a distinguishing characteristic of Anthem,” Swedish told investors during a January presentation at the J.P. Morgan Healthcare Conference in San Francisco. But to make that vision a reality, while still growing profits, Anthem needs the scale it would get from acquiring Cigna.

Also to do population health, it’s also critical for insurers to have a critical mass of patients in each program—not just employer insurance but also individual, not just individual policies but also exchange policies, not just exchange policies but also Medicaid managed care programs, and not just Medicaid but also Medicare and Medicare Advantage.

“We’ve always said we wanted to participate in a lifecycle” with our members, Anthem Chief Financial Officer Wayne DeVeydt told investors after Anthem publicized its buyout offer for Cigna, which Cigna has so far rejected. The two companies together, he said, would have “the largest footprint or largest catcher’s mitt if you will regardless of where the consumer is at in their lifecycle.”

Of course, every company wants to keep customers as long as possible. But in the era of population health, keeping members longer, even as they move between commercial or government programs, between employer and individual insurance, is the only way to make profits from those population health efforts.

“As you start to truly have populations, then regardless of which disease state you’re in, regardless of which line you’re in, we’re going to capture you,” said Shapurji, the Deloitte consultant. “And if you move, then it doesn’t really matter.”

J.K. Wall is a health care reporter at the Indianapolis Business Journal and author of The Dose blog on the business of health care.