Aetna and Humana: Justifying the prize – HealthLeaders Media

Others have said it is unclear that this group of regulators will stick to the usual review playbook for such a large deal and may add other restrictions. However, after Friday’s acquisition announcement, their options just have contracted.

[RELATED STORY: Louisville mayor addresses Humana sale].

Humana has 12,500 employees and 1,500 contractors in the Louisville area.

Hartford, Conn.-based Aetna said it would pay Humana shareholders $125 in cash and 0.8375 Aetna shares for each share held.

Vishnu Lekraj, a senior analyst at Morningstar, said that the consolidation shouldn’t result in big premium increases. The Company’s operations are conducted in three business segments: Health Care, Group Insurance and Large Case Pensions.

Meanwhile, David Balto – former policy director of the Bureau of Competition of the Federal Trade Commission – said: “Agencies are becoming increasingly skeptical about whether you can remedy anti-competitive mergers by having some kind of divestiture”. The company now expects $7.75 in earnings per share (EPS) for 2015, compared to the Thomson Reuters consensus estimate of $8.65 per share.

Both companies have invested in population health management initiatives and products that they see as complementary: Aetna’s Healthagen brand includes programs to launch accountable care organizations, while Humana’s Transcend brand assists providers who are trying to make the transition to value-based reimbursement. Most of those counties are in the South and Midwest.

Aetna concluded by noting that Humana’s Medicare focus coupled with Aetna’s Commercial presence will create a “well diversified business portfolio” with “highly complementary assets”. While the ACA capped insurers’ ability to take profits, industry analysts have been fairly bullish on the sector…. The act led to a competition for new customers and cut margins. They also improve their technology and can ultimately save money by combining the back-office functions of two companies and cutting overlapping jobs.

The combined company would cover more than 33 million people. This in turn has forced health insurers to try and consolidate resources in order to attract more users and at the same time manage to keep the acquisition and maintenance cost of each insurance holder down.

Until the deal closes in the second half of 2016, nothing changes for employees at either company, executives said. Julie Rovner of Kaiser Health News tells Here & Now’s Jeremy Hobson about the merger and what it might mean for consumers.