Aetna’s proposed $5.7 billion acquisition of Coventry Health Care will boost the insurance giant’s presence in Georgia.
Hartford, Conn.-based Aetna has about 500,000 members in Georgia. Coventry, based in Bethesda, Md., has more than 183,000 members in the Peach State, according to its website.
Nationally, Aetna will gain a big chunk of Medicaid enrollment and Medicare members in the deal, which was announced Monday.
While Coventry does not have managed care Medicaid business in Georgia, it does have Medicare Advantage members here.
The deal follows other major insurers’ acquisition moves that focus on increasing their Medicaid and Medicare business.
WellPoint recently announced a plan to buy Amerigroup, which also specializes in Medicaid and runs one of the three managed care Medicaid plans in Georgia. WellPoint is the parent company of Blue Cross and Blue Shield of Georgia.
Earlier this year, Cigna completed a purchase of HealthSpring, with its large share of Medicare revenue.
The government health insurance programs are expected to open up new streams of revenue for insurers. The health reform law, if it survives legislative challenges, will expand Medicaid coverage to millions of Americans starting in 2014, while Medicare is expected to attract more private insurance business.
“The Affordable Care Act may or may not come to fruition, but we have Aetna [and other insurers] really staking a claim,’’ Charles Goldberg, an Atlanta-based health care consultant, said Monday. “The overall trend is toward more managed care in Medicaid.’’
Coventry, though it has a substantial membership in Georgia, has not reached the level of other top insurers in the state, Goldberg noted.
Nationally, Aetna is the third-largest health insurer based on enrollment, trailing UnitedHealthcare and WellPoint.
Medicaid and Medicare Advantage currently represent a small chunk of Aetna’s enrollment, but the company said it expects the deal to raise the revenue it draws from government business to 30 percent, from 23 percent.
According to Yahoo! Finance, Coventry nationally had 253,000 members in its Medicare Advantage Coordinated Care Plans. Its Medicare Part D membership totaled nearly 1.5 million, and its Medicaid business covered 932,000 people.
The Aetna acquisition ‘‘is a deal that almost had to happen,” Thomas Carroll, a Stifel Nicolaus & Co. analyst in Baltimore, told Bloomberg. “For Aetna to really compete effectively amongst the other large, national managed-care companies, they have to do more in terms of gaining market share in the commercial business as well as getting a bigger foothold in Medicare and Medicaid, which are the growth areas in managed care over the next decade.”