Industry Leaders Magazine: Aetna, Humana Acquisition Deal on a Fast Track

More than a third of the USA population has health coverage through an insurer that either wants to make a huge acquisition or is about to be swallowed up in one. Aetna will be acquiring all the shares of Humana in exchange of cash and their own shares. The 2010 overhaul of the USA health-care system provides subsidies to help people afford coverage. Medicare Advantage patients do have fewer choices of doctors they can see, but Mendelson says more are going with this private option. The providers themselves are growing partly with an eye toward new forms of payment encouraged by the health law.

The acquisition deal is happening at a time when the industry has seen many consolidations taking place. Aetna’s shareholders will own 74 per cent of the new company. Huge numbers of those invested parties have relatively minor Medicare Advantage operations.

Humana performs strongly in a key measure of Medicare quality known as star ratings, which are tied to government payments.

According to the Greater Green Bay Chamber, Humana is Brown County’s largest employer, with 3,167 employees as of July 2014. Broussard, president and CEO of Humana, said in the announcement.

Aetna and Humana are in nine of the same states in Medicare Advantage.

It also adds that it will headquarter its Medicare, Medicaid and TRICARE military health care businesses in Louisville.

The Aetna-Humana tie-up would be the largest such deal among health insurers. “Ask anyone that’s ever been stuck on hold with their cable TV company”, he said.

Meantime, Humana has been viewed as prepared for a potential agreement.

Humana has missed analysts’ earnings projections for the last three quarters.

Meanwhile Humana’s Cue, a new app designed just for the Apple Watch, regularly reminds users to do little health-conscious things like standing up, drinking water, or straightening their postures. The amounts made public so far aren’t complete yet, however.

Antitrust experts said a regulatory review of Aetna and Humana could also factor in whether there is another major deal in the industry. Moreover, last week, Target entered into a deal with CVS whereby the ex- will sell its business to the latter for a total of $2 billion. Only UnitedHealth Group Inc. and the Blue Cross-Blue Shield carrier Anthem Inc. cover more.

According to The Courier-Journal (http://cjky.it/1GVakeI), CEOs of both companies said the company’s presence in Louisville will be more robust, growing from $50 billion today to $60 billion under the arrangement.

The said deal is expected to boost Aetna’s ranking in the health insurance industry to number 2, bringing the company on par with Anthem Inc. (NYSE:HUM) for $34.1 billion, following weeks of merger-related speculation concerning the health insurance giants.

Fischer said the Humana Foundation, the nonprofit philanthropic arm of the company, will remain in Louisville.

Aetna said it has received commitments from Citi and UBS Investment Bank to finance the deal.

Access Investor Kit for Health Net, Inc.