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Health insurer Aetna “is said to be closing in on a deal to buy” Louisville-based Humana Inc., Julie Hyman reports for Bloomberg News, “and a deal could come “as soon as this weekend.”
Humana is also expecting an offer from Cigna Inc., but Humana’s board of directors “prefers the Aetna offer,” Hyman reports, citing unnamed people familiar with the negotiations. The deal has been discussed for weeks, but Aetna didn’t make a formal proposal until this week.
The last major obstacle to a deal may have been the Supreme Court’s ruling today that people in all states are entitled to tax subsidies for health insurance under the Patient Protection and Affordable Care Act, Hyman suggests, noting higher stock prices for health-insurance companies.
“Shares of Humana rallied more than 8 percent after trading was briefly halted for volatility,” Reem Nasr of CNBC reports.
Humana is an attractive buy because “a great deal of its business — 73 percent of its premiums revenue —
comes from contracts with the federal government,” David Mann reports for Louisville Business First. “That means Humana is flush with Medicare business, which is a fast-growing
category in the industry as many baby boomers are reaching the
eligibility age. Its competitors, including Aetna, don’t have nearly as
much of this business.”
“Consolidation among the country’s top insurers follows a massive
consolidation among providers in pharmacy, hospital and patient care,
which has increased the leverage against insurers like Humana and Aetna,” Grace Schneider reports for The Courier-Journal.