It was also a relief for the health insurance industry.
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The companies revealed in a recent news release that this complimentary association brings together Aetna’s commercial capabilities and diversified portfolio and the evolving Medicare Advantage project of Humana. Humana is the nation’s second-largest Medicare Advantage plan provider with 3 million members.
“Government markets are the most rapidly growing aspect of the system”, said Dan Mendelson, chief executive officer of the market research firm Avalere Health.
If the deal does go through, it will dwarf the ACE Ltd’s $28 billion acquisition of Chubb Corp – previously the largest insurance deal – which was announced just last week.
Health insurers have been trying to consolidate for weeks in a fresh merger wave. Now, major health insurers are concerned regarding expanding more following the U.S. reform known as Obamacare.
Humana, based in Louisville, Kentucky, has been under pressure for more than a year from investors, which include activist fund Glenview Capital Management, to produce higher returns. It is the first such deal among the largest companies in the industry.
Smaller companies are also doing their best to catch up with the major companies.
The impact on consumers can be murky and likely won’t be felt for at least a year, because insurers have already finalized most of their plans for coverage that starts in January. “Cigna has fewer choices at this point”.
Insurers also are using technology more to help monitor and improve patient care.
At $230 a share in cash and stock, Aetna paid about a 29 percent premium over Humana’s stock price in late May, before talks began.
Aetna CEO Mark Bertolini is optimistic the merged healthcare company will remain one of Louisville’s top employers as the company moves forward with plans to acquire Humana.
By 2018, Aetna anticipates getting $1.25 billion of annual cost savings by combining the companies – about $1 billion of which is reduced operating expenses, executives said Monday.
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Anthem publicly made an offer to Cigna for $47 billion. Post opening the session at $129.41, the shares hit an intraday low of $125.45 and an intraday high of $129.74 and the price vacillated in this range throughout the day. Markets were closed Friday for the July 4th holiday. All told, the company has 57,000 employees scattered across several states.
