A $54-billion bid by Anthem Inc. to purchase chief rival Cigna Corp. will result in more consolidation of the health insurance market and potentially higher premiums and less choice for Americans looking for health insurance.
Anthem, the nation’s second-largest health insurer, is offering $184 a share for Cigna in cash and stock, or $54 billion, including debt, but has expressed frustration that talks had stalled in recent days over the future role of Cigna’s chief executive as it could let in another company to vie for the Bloomfield, Conn. based Cigna which is the nation’s fifth-largest health insurer.
Anthem said its purchase of Cigna would result in $115 billion annual revenue and serve 53 million members making it the industries leader ahead of UnitedHealth Group Inc. in terms of membership.
Cigna has been negotiating its own deal for Humana Inc which is prized for its strong Medicare Advantage business, while UnitedHealth has made merger overtures to the nation’s third-largest company, Aetna Inc.
Each of the companies with their merger and takeover bids are looking to take advantage of rising revenues from the Affordable Care Act and Medicare and Medicaid’s growing privatization.
Although health law expansion of subsidized, private coverage and Medicaid, the joint state-federal insurance program for the poor, has benefited the health insurance sector, expanding membership and revenue hasn’t seen bigger profits for much of the industry.
Health insurers are hoping consolidation will assist them to squeeze out more costs and negotiate better prices with hospitals, doctors and drugmakers.
Anthem sells Blue Cross plans in 14 states. It also has a big Medicaid managed-care business in many states.
Healthcare experts have expressed deep concern that any savings likely won’t be passed along to employers and consumers and that these deals raise serious antitrust concerns given the lack of choice in the market already.
The FTC has not indicated at this point if it will object, though any deal of this size will receive significant regulatory scrutiny.
Stay Connected
