On July 3, the Hartford-based Aetna said it had agreed to acquire the Louisville-based Humana for $37 billion in cash and stock, in the largest acquisition of its type in the history of health insurance in the United States. As The New York Times’ report noted, “The deal would bring together two of the biggest health insurers in the United States. The combined company would have estimated operating revenue of $115 billion this year and serve more than 33 million people.”
And as a report in the American Journal of Managed Care online noted on Friday, “The deal, which has been approved the boards of directors of both companies, continues the trend of consolidation that has swept the healthcare industry since passage of the ACA. Some fear that ongoing consolidation will thwart competition and drive up prices for consumers, undermining a key goal of the law.” Further, the AJMC news story noted, “Reports of the deal had been floated since the spring, but both sides awaited the outcome of King v. Burwell; on June 25, the Supreme Court ruled 6-3 that consumers in states without healthcare exchanges could still obtain financial assistance to buy coverage. Aetna has benefited from the ACA and looks to keep up that trend in its acquisition of Humana, which is the nation’s second-largest provider of private Medicare coverage,” AJMC noted. “New rules proposed by CMS will call for increase movement to payment reform in both Medicare and Medicaid, and for more seamless transitions for consumers who move between Medicaid and coverage on the exchanges that are purchased with tax subsidies. Thus, having strong footholds in all sectors of public coverage will prove beneficial, analysts have said.”
And The New York Times’ article further reported that “The proposed merger occurs as the nation’s largest for-profit health insurers seek ways to reduce costs and capitalize on growing opportunities in the government and individual markets. The companies say they will be able to operate more efficiently and negotiate more effectively with large health systems, which have also been consolidating.” The Times report quoted Mark T. Bertolini, Aetna’s chairman and chief executive, as saying, in a news release that the acquisition “will significantly advance our strategy of more effectively serving members in a rapidly changing health care industry.” The announcement also noted that the company’s board would be expanded to 16 members and include four Humana directors.
Healthcare Informatics will continue to update its readers on developments as they occur.