Insurance giant Aetna said Friday that it has agreed to buy rival Humana for $37 billion in a deal that reflects the rampant consolidation...

Insurance giant Aetna said Friday that it has agreed to buy rival Humana for $37 billion in a deal that reflects the rampant consolidation in health care.

aetThe acquisition, if approved by shareholders and regulators, will roughly double Aetna’s membership in Georgia.

Connecticut-based Aetna has roughly 700,000 Georgia members in its health plans, while Louisville, Ky.-based Humana covers 692,000 in Georgia. 

Blue Cross and Blue Shield of Georgia, with about 3 million members, will still be the leading health insurer in the state even if the Aetna-Humana merger deal is completed.

Nationally, the combined Aetna/Humana company would cover more than 33 million consumers.

Consolidation among hospitals and among insurers has become a dominant theme in recent years as pressure has increased on containing health costs and improving quality.

clipboardThe Affordable Care Act has created more customers for health insurance, and has led insurers to seek cost savings. And last week the U.S. Supreme Court buttressed that growing customer market by upholding all existing subsidies for ACA exchange users.

Health insurers are also seeking more clout in striking deals for medical care and prescription drugs.

Blue Cross of Georgia’s parent company, Anthem, is pursuing Cigna, another large national insurer. And Thursday, Centene, the parent company of Peach State Health Plan in Georgia, said it will buy Health Net for about $6.3 billion.

The Aetna cash-and-stock deal would be the largest ever in the insurance industry, Reuters reported.

 

Regulatory scrutiny?

 

A deal the size of Aetna/Humana could trigger regulatory scrutiny on antitrust grounds, said Bill Custer, a health insurance expert at Georgia State University.

The combination would have less effect on metro Atlanta – where there are more insurance options – than on other areas of the state, which have less insurer competition, Custer said.

Such insurer consolidation “will increase their ability to negotiate with [medical] providers,’’ Custer said. “Providers will be affected.”

As for consumer premiums, Custer added, “it’s too hard to tell” what the effect of insurer consolidation would be.

Those premiums are already rising “because the price of health care is going up,” he said.

The Aetna acquisition is expected to close in the second half of 2016.

“The acquisition of Humana aligns two great companies and will significantly advance our strategy of more effectively serving members in a rapidly changing health care industry,”  Mark Bertolini, the Aetna chairman and chief executive, said in a statement.

“This combination will allow us to continue to invest in excellent service for our members and strengthen our partnerships with providers to deliver high quality care at an affordable price.”

Aetna said it expects to achieve $1.25 billion in annual cost savings by 2018 after the merger.

Plans are for Bertolini to serve as chairman and chief executive of the combined company.


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Andy Miller

Andy Miller is editor and CEO of Georgia Health News

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