Aetna and Humana: Giant in the making

Making insurance industry history last week, Aetna Inc announced they would be purchasing Humana. Setting the purchase price at a cool $37 billion in cash and stock, jaws dropped when Aetna’s powerful purchase became public. This combination now putting Aetna at the No.2 spot in active membership. this healthcare giant is poised to grow ever larger.

Jeremy Barbera - AetnaDwarfing what was considered to be the largest insurance deals of the past, this transaction has not gone unnoticed by the Antitrust Authority. Charged with insuring the fairness of our free-market, the Antitrust Authority is concerned that the growth of Aetna could spell trouble down the road for others in the healthcare industry, or possibly those in need of future services. The bigger the insurer, the more control they have negotiating over prices and doctor networks, controlling the level of care

Such a large health insurance conglomerate means a wider influence over several branches of insurance care. Medicare, Medicaid, individual and commercial insurance would all be governed by one powerful entity. While the combined power of these two healthcare giants seems daunting, giving the conjoined companies more than 80% saturation in certain states, Wall Street analysts believe the transaction will not meet any interference.

The final say, however, falls to The Justice Department. In charge of reviewing insurance mergers to prevent the formation of monopolies, the Antitrust Authority and The Justice Department are prepared to go through the fine print of this merger to locate any signs of foul play.

The combined power of Aetna and Humana services over 33 million medical members, with a projected operating revenue of $115 billion this year. While the finality of the merger has yet to be set in stone, very few obstacles look to stand in the way of these two giants combining their formidable strength.