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Anthem acquiring rival Cigna in $54.2 billion deal

Posted On Jul 24 2015
By : Brain Carroll
Comment: Off
Tag: Anthem, Aetna, Anthem and Cigna, Cigna, health care, Humana, Medicare Advantage

Earlier this month, the Connecticut-based Aetna purchased Humana. That helped cover up a 5 percent decline in revenue. Seven analysts surveyed by Zacks expected $10.93 billion.

There’s been a huge shift in the way insurance is bought and sold in the past few years.

Meiji Yasuda said the 50 percent premium it paid was appropriate given StanCorp’s growth potential.

However, Stack said suggested those “efficiencies” may not be consumer-friendly.

“The good news for us is Cigna, a first five company”. Large combinations of hospital operators can be hard to pull off because regulators don’t want to repeat the mistakes of past deals that eventually led to higher prices for consumers, McGorman of Bloomberg Intelligence said.

The health care insurance industry’s consolidation rush is accelerating with insurance giant Anthem‘s(ANTM) deal to acquire Cigna (CI) in a deal valued at $54.2 billion. Medicare Advantage plans are privately run versions of the federal government’s coverage program for people who are over 65 or disabled, and their rolls were growing long before the health care overhaul.

“n”>Anthem Inc’s decision to buy Cigna Corp, forming the largest U.S. health insurer by membership, will likely speed consolidation across the healthcare industry, from hospitals to drugmakers.

Forrester analyst Alex Cullen said the deals are being driven by the “huge pressure” on healthcare firms to reduce costs.

The pharmaceutical sector has also been a hotbed for deal making in recent years and the prospect of larger health insurers exerting influence over drug pricing will serve as a new catalyst, experts said.

But the merger’s impact will take time to be felt by consumers, because insurers have already finalized most of their plans for coverage that starts in January. At a very basic level, that means things like tracking whether patients are keeping up with their immunizations. They also hope to cut their own costs with increased purchasing power over drugmakers and health care providers.

Anthem, based in Indianapolis, is the nation’s second-largest health insurer, while Cigna ranks fourth in enrollment. For example, Cigna is a big player in the dental, life, disability and expatriate health insurance markets while Anthem is known for its strength in the Medicaid and small and medium-size employer market.

Aetna this month announced a billion deal for Humana, and if both transactions are completed, the number of major health insurers in the United States would shrink to three. “Where an employer might have had his choice of Anthem, Cigna, UnitedHealth and Aetna, after these mergers he’s only got three companies from which to choose”, Wade wrote in an e-mail.

Now: Swedish told investors that the companies internally analyzed how their merger would apply to Blues rules and added that Anthem and Cigna are confident that the combined company will not violate any of them.

The Anthem board will expand to 14 members.

Under the deal, which the companies expect to close in the second half of 2016, Anthem Chief Executive Joseph Swedish would serve as CEO and chairman.

Anthem Blue Cross and Blue Shield's headquarters in Wallingford

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