Competing offers for the Medicare Advantage insurance plans have been made by WellCare Health Plans Inc and Centene Corp. Aetna Inc looks to shed the plans in seeking clearance for its acquisition of Humana Inc, reports news agency Reuters.
At the centre of Aetna's efforts to win over regulators for its $34-billion Humana deal is this potential disinvestment plan. In a bid to address their antitrust concerns, the health insurer recently met U.S. Department of Justice officials.
The portfolio of Aetna's Medicare Advantage plans for which WellCare and Centene submitted bids this week covers around 350,000 patients, sources told Reuters. Aetna would need to sell Medicare Advantage plans in geographies where combined market share is greater than 35 percent if the company intends to appease antitrust concerns, said Wall Street analysts. If the deal goes through it would make it one of the largest players as Aetna and Humana combined will still have more than 4 million Medicare Advantage customers.
There is small overlap in other parts of the companies' businesses. While two-thirds of Humana's business is Medicare Advantage, Aetna, the third largest health insurer, sells individual, small business and large corporate plans as well as other government plans.
There were reports earlier in July that with a $2.5-billion book of business and with a potential value of around $1 billion, Aetna had launched the sale of the Medicare Advantage portfolio.
Sources said that while there is no certainty that WellCare or Centene will prevail should Aetna go ahead with the divestiture, the portfolio has also attracted interest from other companies.
While Humana and WellCare did not immediately respond to requests for comment, Aetna declined to provide any comment.
"It is Centene's policy not to comment on rumors. Additionally, it is a long-term policy of Centene not to participate in auctions," a Centene spokeswoman told Reuters in an emailed statement.
The size of WellCare's and Centene's Medicare businesses would be more than doubled by the potential deal.
Including the state of Florida, New York, Georgia, Texas, California and Mississippi, WellCare, which primarily sells Medicaid plans, had 326,000 members in Medicare Advantage plans at the end of March.
Including Medicare Advantage and new pilot programs serving those eligible for both Medicare and Medicaid, Centene had 303,000 members in Medicare plans. Centene closed on an acquisition of Health Net this year.
Simultaneous scrutiny of Anthem Inc's ANTHM.N acquisition of Cigna Corp is being conducted by the U.S. Department of Justice. Last summer, both the deals were announced within a month of one another.
The number of national health insurance companies would shrink to three from five if both deals were to be approved. The deals could lead to higher premiums for patients and lower payouts to healthcare providers, fear some doctors, hospitals and consumers.
In order to bring down medical costs for consumers is the argument that is given by the companies. Effectively shooting down the planned mergers of Pfizer Inc and Allergan Plc, Halliburton Co's and Baker Hughes Inc, and Staples Inc and Office Depot Inc, so far this year, regulators and government departments have treated large deals with a heavy hand.
(Source:www.reuters.com)
At the centre of Aetna's efforts to win over regulators for its $34-billion Humana deal is this potential disinvestment plan. In a bid to address their antitrust concerns, the health insurer recently met U.S. Department of Justice officials.
The portfolio of Aetna's Medicare Advantage plans for which WellCare and Centene submitted bids this week covers around 350,000 patients, sources told Reuters. Aetna would need to sell Medicare Advantage plans in geographies where combined market share is greater than 35 percent if the company intends to appease antitrust concerns, said Wall Street analysts. If the deal goes through it would make it one of the largest players as Aetna and Humana combined will still have more than 4 million Medicare Advantage customers.
There is small overlap in other parts of the companies' businesses. While two-thirds of Humana's business is Medicare Advantage, Aetna, the third largest health insurer, sells individual, small business and large corporate plans as well as other government plans.
There were reports earlier in July that with a $2.5-billion book of business and with a potential value of around $1 billion, Aetna had launched the sale of the Medicare Advantage portfolio.
Sources said that while there is no certainty that WellCare or Centene will prevail should Aetna go ahead with the divestiture, the portfolio has also attracted interest from other companies.
While Humana and WellCare did not immediately respond to requests for comment, Aetna declined to provide any comment.
"It is Centene's policy not to comment on rumors. Additionally, it is a long-term policy of Centene not to participate in auctions," a Centene spokeswoman told Reuters in an emailed statement.
The size of WellCare's and Centene's Medicare businesses would be more than doubled by the potential deal.
Including the state of Florida, New York, Georgia, Texas, California and Mississippi, WellCare, which primarily sells Medicaid plans, had 326,000 members in Medicare Advantage plans at the end of March.
Including Medicare Advantage and new pilot programs serving those eligible for both Medicare and Medicaid, Centene had 303,000 members in Medicare plans. Centene closed on an acquisition of Health Net this year.
Simultaneous scrutiny of Anthem Inc's ANTHM.N acquisition of Cigna Corp is being conducted by the U.S. Department of Justice. Last summer, both the deals were announced within a month of one another.
The number of national health insurance companies would shrink to three from five if both deals were to be approved. The deals could lead to higher premiums for patients and lower payouts to healthcare providers, fear some doctors, hospitals and consumers.
In order to bring down medical costs for consumers is the argument that is given by the companies. Effectively shooting down the planned mergers of Pfizer Inc and Allergan Plc, Halliburton Co's and Baker Hughes Inc, and Staples Inc and Office Depot Inc, so far this year, regulators and government departments have treated large deals with a heavy hand.
(Source:www.reuters.com)