Aetna-Humana Merger Analysis

On July 3, 2015 the third and fifth ranked largest health insurance companies in America Aetna Incorporated and Humana Incorporated announced that Aetna would acquire Humana’s outstanding shares for $37 billion. Aetna describes the merge as a drive towards better valued and higher quality healthcare by reducing administrative costs and combining the best practices from the two companies in a way which will allow the new entity to compete in the market with cost-effective products (“Aetna to Acquire,” 2015). This paper will explore the populations served by both companies, the factors leading to the merge, the intended goals and speculated concerns of the merge, whether it is projected to be successful, and its future implications. Humana …show more content…
This will give the company a million more members in Medicare Advantage plans over UnitedHealth (Mathews, Hoffman, & Mattioli, 2015). Interestingly, United which is the nation’s largest healthcare insurance entity has been silent on the matter of the Aetna-Humana deal, and analysts state that the company is independently strong with its solid membership of 45.9 million people and may benefit comfortably from smaller scale acquisitions (Snowbeck, …show more content…
From the healthcare aspect, concerns have been voiced by practitioners about increased insurance company power and that the merger will remove a competitor from the ACA’s insurance policy healthcare marketplace (Mathews et al., 2015; Yan & LaMonica). Hospitals are critical of the merge and take the stance that insurance oligarchies translate into low provider payments, narrowed provider networks, and increased cost-sharing for consumers to contend with (Herman, 2015). The most prominent concerns from the hospitals’ point of view are that the merger will ignite a chain of industry consolidation as physicians who were undecided choose to align themselves with the larger companies while simultaneously insurers preen technology and care management product vendors. Due to the reasons that initiated the Aetna-Humana merge, it can be speculated that it will be highly successful over the long term by setting precedence for healthcare insurance companies and creating landmarks in the ways that consumer needs are addressed. Aetna will be competitively positioned and will have a wide customer base of Medicare Advantage patients to serve, especially since age cohorts such as Baby Boomers are going to be requiring different forms of health insurance plans as they age and