The health insurance segment seems to be in the consolidation mode. Anthem Inc (NYSE:ANTM) is most likely to announce its acquisition of Cigna Corporation (NYSE:CI) on Friday if reports are to be believed. Based on Thursday’s closing price of $154.37, the acquisition might command a premium of more than 21%. However, there will be a big question mark as to how these two companies could convince the regulator of the anti-trust.
Agreement
Quoting sources, CNBC reported that Anthem Inc (NYSE:ANTM)’s acquisition of Cigna Corporation (NYSE:CI) will be in the form of both cash and stock. While the cash component will likely be 55%, the remaining 45% will be in the form of stock. The reported price is said to be $188 a share for Cigna. The boards of both the companies were expected to give their nod for the agreement.
In June, Anthem Inc (NYSE:ANTM) indicated that it made a number of offers to buy Cigna Corporation (NYSE:CI). However, an agreement to that effect was getting delayed due to the resolution of key issues. That was nothing but who should lead the merged entity apart from the corporate governance. Cigna also expressed its concerns over some of the Blue Cross Blue Shield Association members remaining an obstacle to the deal.
Consolidation
The deal, if announced, will come on the heels of Aetna Inc (NYSE:AET) announcing its deal to buy Humana Inc (NYSE:HUM) for $37 billion earlier this month. That meant that the number of insurance companies in the United States would get reduced to three from five. That will invite the attention of the anti-trust regulator, who will have a tough to deal with it.
That will also be applicable in the case of Anthem Inc (NYSE:ANTM) if it agrees to buy Cigna Corporation (NYSE:CI). However, health insurers have different plans. They believe that a bigger enterprise would enable them to negotiate prices better with both hospitals, as well as, the doctors apart from reducing administrative costs.
Anthem, Inc., incorporated on July 17, 2001, is a health benefit company. The Company offers a range of network-based managed care plans to large and small employer, individual, Medicaid and Medicare markets. Its managed care plans include preferred provider organizations (PPOs), health maintenance organizations (HMOs), point-of-service (POS), plans, traditional indemnity plans and other hybrid plans, including consumer-driven health plans (CDHPs), and hospital only and limited benefit products. In addition, the Company also provides an array of managed care services to self-funded customers, including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services. The Company provides an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits, radiology benefit management and analytics-driven personal health care. The Company also provides services to the federal government in connection with the Federal Employee Program (FEP).
The Company’s products and services include Preferred Provider Organization (PPO) products offer the member an option to select any health care provider, with benefits reimbursed by the Company at a higher level when care is received from a participating network provider; Consumer-Driven Health Plans (CDHPs) provide consumers with increased financial responsibility, choice and control regarding how their health care dollars are spent; Traditional Indemnity, Indemnity products offer the member an option to select any health care provider for covered services; Health Maintenance Organization (HMO) products include comprehensive managed care benefits, generally through a participating network of physicians, hospitals and other providers; Point-of-Service (POS) products blend the characteristics of HMO, PPO and indemnity plans; ACA Public Exchange and Off-Exchange Products, In the Company’s Individual and Small Group markets it offers bronze, silver and gold products, both on and off the public exchanges, as well as platinum products, both on and off the public exchanges; Administrative Services, which include services to Large Group employers that maintain self-funded health plans; BlueCard; Medicare Plans, which offers a variety of plans, products and options to individuals age 65 and older, such as Medicare supplement plans, Medicare Advantage (including private fee-for-service plans and special needs plans), Medicare Part D Prescription Drug Plans, or Medicare Part D and Medicare-Medicaid Plans (MMPs); Individual Plans, which offers a range of health insurance plans with a variety of options and deductibles for individuals under age 65 who are not covered by employer-sponsored coverage; Medicaid Plans and Other State-Sponsored Programs; Pharmacy Products, it markets and sells integrated prescription drug products to both fully-insured and self-funded customers through its health benefit subsidiaries; Life Insurance, offers an array of individual and group life insurance benefit products to both Large Group and Small Group customers in conjunction with its health plans; Disability, which offers short-term and long-term disability products, in conjunction with its health plans; Radiology Benefit Management, offers outpatient diagnostic imaging management services to health plans; Personal Health Care Guidance, which offers leading evidence-based and analytics-driven personal health care guidance; Dental; Vision Services and Products and Medicare Administrative Operations. The Company has three operational segments: Commercial and Specialty Business, Government Business and Other. The Company’s Commercial and Specialty Business and Government Business segments both offers a mix of managed care products, including PPOs, HMOs, traditional indemnity benefits and POS plans, as well as a variety of hybrid benefit plans including CDHPs, hospital only and limited benefit products.
Commercial and Specialty Business
The Company’s Commercial and Specialty Business segment includes its Local Group, National Accounts, Individual and Specialty businesses. Business units in the Commercial and Specialty Business segment offer fully-insured health products; provide an array of managed care services to self-funded customers including claims processing, underwriting, stop loss insurance, actuarial services, provider network access, medical cost management, disease management, wellness programs and other administrative services, and provide an array of specialty and other insurance products and services, such as dental, vision, life and disability insurance benefits, radiology benefit management and analytics-driven personal health care guidance.
Government Business
The Company’s Government Business segment includes Medicare and Medicaid businesses, National Government Services, or NGS, and services provided to the federal government in connection with FEP. Medicare business includes services, such as Medicare Advantage, Medicare Part D, and Medicare Supplement. Medicaid business includes its managed care alternatives through publicly funded health care programs, including Medicaid, Temporary Assistance for Needy Family programs (TANF), programs for seniors and people with disabilities (SPD), programs for long-term services and support (LTSS), Children’s Health Insurance Programs (CHIP) and ACA-related Medicaid expansion programs. NGS acts as a Medicare contractor in several regions across the nation.
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