$48B Health Care Deal Could 'Reshape Industry'

Anthem-Cigna news comes just weeks after Aetna-Humana announcement
By Jenn Gidman,  Newser Staff
Posted Jul 24, 2015 5:30 AM CDT
$48B Health Care Deal Could 'Reshape Industry'
Anthem is scooping up Cigna in $48 billion deal.   (AP Photo/Michael Conroy, File)

In a deal that the Wall Street Journal says could "reshape the US health industry," Anthem has agreed to buy Cigna for more than $48 billion—forming a combined entity that will cover more than 53 million people. Just weeks after Aetna announced it plans to acquire Humana for more than $34 billion, this continued "buyout frenzy," as the AP puts it, could whittle five of the country's largest health insurers down to just three, with UnitedHealth Group being the only entity left standing on its own. This deal, as well as the Aetna-Humana announcement earlier this month, has naturally caught the eye of antitrust regulators, who are expected to be looking into both mergers.

Anthem CEO Joseph Swedish will continue to man the helm, adding "chairman" to his title, while Cigna CEO David Cordani will become president and head of operations. Reportedly, Cordani's role in the new company was a stalling point in talks that have been going on since last summer. Advantages to the deal—expected to close by the second half of 2016—include the ability to better negotiate rates with care providers and the chance to make larger technology investments, as well as the possibility of getting rid of $2 billion per year in overlap costs, industry analysts and Anthem officials tell the AP and the Journal. One challenge Anthem may face: how to get around a licensing deal with the Blue Cross and Blue Shield Association that requires it to reap two-thirds of its national net revenue from Blue-labeled business, the Journal notes. (More Cigna stories.)

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