Proponents say a larger health insurer could persuade hospitals, physician groups and pharmaceutical companies to offer lower prices based on the high membership numbers, and that those savings could be passed down to policyholders. Cigna shareholders will receive US$103.40 in cash and 0.5152 Anthem common shares for each Cigna common share.
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Apparent worries about regulatory scrutiny have also hit Humana shares, which closed at US$181.76 on Friday, well below the value of Aetna’s cash-and-stock offer of US$230 per share when it was announced on July 3. The new company is projected to generate $115 billion in revenues annually. Our responsibility as a health benefits company is evolving, and we recognize the need to help health care consumers decide how to choose a plan and utilize health care-not just pay for it. This acquisition will further our mission to follow through on this important responsibility and deliver the highest quality and most efficient access to care available to members.
“The Aetna-Humana deal left Cigna with many fewer dance partners, because both of those companies were potential merger candidates for Cigna”, Gupte said.
The effects on the health insurance industry are only part of the law’s impact, as it brought on waves of deals between drug companies, medical device makers and prescription benefit managers as they reacted to new pressures to keep their costs down. This news comes hot on the heels of a $37 billion deal between Aetna and Humana.
“To give commercial health insurers virtually unlimited power to exert control over an issue as significant and sensitive to patient health care is bad for patients and not good or the nation’s health care system”, he said. The largest, UnitedHealth Group, has not participated in a deal yet. Now, much like “an arms race”, you’re seeing the insurer carriers trying to improve their leverage.
“I want the DOJ to take look at whether these mergers will affect consumers with increased prices”, U.S. Sen.
Anthem and Cigna aren’t the only insurers looking to team up.
The mergers will also remove competitors from the exchanges where people can buy insurance coverage under the Affordable Care Act in several states, the WSJ reports.
Ranked by number of health plan members, Anthem and Cigna will be the biggest insurer, with more than 53 million members.
But Anthem CEO Joe Swedish and Cigna CEO David Cordani said on a conference call that they had ironed out differences. 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. Medicare Advantage plans are privately run, fast-growing versions of the federally funded program for people over 65 and the disabled.
Anthem’s last major acquisition was Amerigroup, a government health care provider, in 2012 for $4.5 billion.
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The antitrust division of the U.S. Attorney General’s office and the Federal Trade Commission must approve these deals.
