Aetna plans purchase of insurer Coventry for $5.7B [Pittsburgh Post-Gazette
08/21/2012 6:05 AM ETAug. 21–In a $5.7 billion bid that will remake the U.S. and Pennsylvania health care marketplaces, health insurer Aetna Inc. has announced plans to buy fellow insurer Coventry Health Care.
If the cash-and-stock acquisition goes through, Connecticut-based Aetna — the third-largest insurer by enrollment and the fifth-largest U.S. health insurer by revenue, with $27 billion in direct premiums in 2011 — will have acquired the nation’s 10th-largest health and accident insurer by revenue, with $11.1 billion in direct premiums.
Combined, the two companies would control about 5.4 percent of the U.S. market, and would have had about $38 billion in direct premiums last year, putting them fourth on the list behind UnitedHealth, Wellpoint Inc. and the Kaiser Group, leapfrogging over Humana.
Nationally, Aetna’s proposed acquisition of Coventry will bolster Aetna’s Medicaid enrollment numbers months before millions of uninsured Americans are expected to become eligible for Medicaid coverage through President Barack Obama’s health care overhaul.
The deal also ramps up Aetna Inc.’s Medicare Advantage and Medicare prescription drug businesses, as interest in these plans grows while the baby boomer generation ages and becomes eligible. Medicare Advantage plans are privately run versions of the government’s Medicare coverage for the elderly.