Who’s Buying Who, Why, and Do I Need To Be Concerned?
If you’ve been following the business news, you probably know that Aetna has made a formal offer to purchase Humana. It has also been announced that Anthem has an agreement to purchase Cigna. Both are multi-billion dollar packages and have been examine extensively by the Justice and Commerce departments of the federal government. Many states have weighed in as well.
You've probably also read that each of these companies have experienced extremely large losses on their individual health insurance blocks of business that are tied to the Obamacare exchanges. As a result, they are all backing away from the exchanges in 2017.
From my perspective, it seems the main reason that Aetna is acquiring Humana is for their huge block of Medicare business. Many people don't realize that Humana is one of the largest companies in the Medicare Advantage and Medigap sectors in the country. Also from my perspective, it appears that Anthem would really like to get their hands on Cigna's large group segment. Anthem is ahead of Cigna in the Medicare space already, so I don't see that as a major factor.
What About Medicare??
What will happen for Medicare in the upcoming open enrollment season — well…nothing. The Department of Justice has brought suits against both companies to block the mergers, using the anti-trust laws as a basis for their arguments. The Aetna-Humana case may get heard in November, but it now seems likely that the Anthem-Cigna case won't be heard before early 2017. Both mergers involve multi-billion breakup fees if either party reneges or the courts block the buyouts.