Mergers and acquisitions are heating up in the health insurance industry. Here is a look at some recent deals:
CVS & Aetna
Shareholders have approved CVS Health’s acquisition of Aetna. If a merger goes through, the company would be a health insurer, retail pharmacy and PBM all in one with stronger bargaining power over prescription-drug prices. The merger is likely to face anti-trust hurdles.
Cigna & Express Scripts
Cigna would acquire Express Scripts under a definitive agreement between the two companies. Cigna CEO David M. Cordani said, “Together, we will create an expanded portfolio of health services, delivering greater consumer choice, closer alignment between the customer and health care provider, and more personalized value.” Express Scripts CEO, Tim Wentworth said, “First and foremost, we believe this transaction delivers attractive value to the Express Scripts shareholders.”
If both mergers move forward, the integrated PBM-insurer systems would dominate the markets. Entry barriers would increase dramatically, scalable only by players that could compete at two levels – PBM and health insurance, according to a letter by the American Antitrust Institute.
Wal Mart & Humana
Walmart has discussed a merger with Humana. However, since Humana announced that it’s participating in a $1.4 billion acquisition of a national hospice provider, Walmart is not likely to still be looking at the company as an acquisition target, according to an article in Louisville Business First.
The Hartford & Aetna’s Life and Disability Business
The Hartford has entered into a definitive agreement to acquire Aetna’s U.S. group life and disability business. If the merger goes through, the Hartford would become the second largest group life and disability insurer. The Hartford’s CEO Christopher Swift said, “The combination of these two businesses strengthens our position as a leader in the large employer market and increases our presence among midsize employer clients. It also creates new opportunities to distribute additional products to a customer base of more than 20 million people who will be insured by the combined business.”
Alera Group launched in 2016 by merging 24 firms. In a short time, it has become the seventh largest privately held employee benefits firm in the United States. Since launching, the company has purchased insurance firms all over the U.S. The biggest concentration of Alera’s offices are on the East Coast. In California, the company now owns PWA Insurance Services near Sacramento and Centennial in Newport Beach.