Cigna, Humana Eye ‘Blockbuster’ Merger

Health insurance industry monoliths Cigna and Humana are in talks for a cash - and - stock deal that would merge the two into a "blockbuster" partnership that could be finalized by the end of the year, according to The Wall Street Journal.

Cigna's Express Scripts manages prescription drug plans and offers commercial insurance. Humana is the second - biggest player in the fast - growing Medicare Advantage plans market, behind United Healthcare. Under Medicare Advantage, private insurers are paid a set rate to manage health care for people ages 65 and older or who have disabilities.

Humana, based in Louisville, Ky., looms large in the "fast - growing Medicare segment, something Cigna has long sought," the WSJ reported. And Reuters reported in June that Humana had warned "of a jump in medical costs" for non- urgent surgeries such as hip and knee replacements that older adults had postponed during the pandemic. Humana expected the "elevated demand … to spill into [2024] and hurt its profit growth."

The Cigna - Humana merger could help Cigna "accelerate a strategy that is core to the managed - care business, a move toward paying doctors and hospitals in ways that aren't tied to the volume of service provided," the WSJ reported.

The potential merger is something employers will want to keep their eyes on. It's also expected to attract antitrust scrutiny from the federal government. Anthem, now Elevance Health, planned to purchase Cigna in 2016, and Aetna was looking at acquiring Humana that year, as well, Reuters reported. The Justice Department filed lawsuits against both mergers on the same day and won the court battle.

Bill Baer, who was at the Department of Justice when those lawsuits were filed, told Reuters that talk of this latest proposed merger was "surprising" given the government successfully stopped two big health insurance mergers just a few years ago.

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Why a Cigna - Humana Merger Makes Some Sense

Reports that health insurance giants Humana and Cigna may merge in a blockbuster deal could make sense given strengths each has in Medicare Advantage and commercial coverage. It would also meld their medical care provider operations, which are growing but not nearly as fast as rivals UnitedHealth Group.

It's unclear who would lead the combined company, but long - time Humana chief executive Bruce Broussard has already announced he is retiring next year. (Forbes)

New Antitrust Merger Guidelines Could Have Significant Chilling Effect on Health Care Deals

New Federal Trade Commission and Department of Justice guidelines include a number of facets that regulators could use to target vertical and cross - market deals. The guidelines are likely to have a chilling effect on merger activity overall - at least temporarily, until corporate America sees how M&A challenges play out in the courts, lawyers said. (Healthcare Dive)

Cigna - Humana Merger Is Likely to Face Antitrust Challenge

A combination of the two health insurers will be scrutinized by the government, but that doesn't mean it won't have a good argument at court. (The Wall Street Journal)

Consolidation in U.S. Health Insurance Industry

The U.S. Department of Justice, citing the prospect of higher prices, in 2016 successfully sued to stop two proposed mega mergers: Anthem-now Elevance Health-planned a $54 billion purchase of Cigna, and Aetna proposed a $34 billion acquisition of Humana. The companies said those proposed deals were triggered by the Affordable Care Act, which was fully implemented in 2014. Here is what has happened in deals involving health insurers since the law went into effect. (Reuters)