Once the deal between Humana and Aetna was formally announced last week, speculation concerning the ramifications of the proposed acquisition has been plentiful – especially in Louisville, where Humana employs thousands of people.
On July 3, the two companies announced that Aetna would pay around $37 billion for Humana.
As the second-largest employer in Louisville, with nearly 14,000 employees and contractors, Humana is an integral economic institution for Derby City.
Here’s what’s in the news:
In a conference call July 6 with Wall Street analysts, Aetna CEO Mark Bertolini and Humana CEO Bruce Broussard reiterated that the company would maintain, or even increase, employment in Louisville, according to the Courier-Journal. The CEOS also outlined a company plan that would see Louisville becoming the headquarters for Aetna’s government-related programs: Medicare Advantage, Medicaid, and Tricare, the Department of Defense contract to provide medical coverage and medications for military members and their families.
The two CEOs also expressed confidence regulators would ultimately OK the deal. However, in light of a recent antitrust suit filed by the Justice Department involving Electrolux’s bid for General Electric’s appliance division – including Louisville’s Appliance Park – some analysts believe the merger will be a tough pill to swallow. Yesterday the Wall Street Journal reported that antitrust approval is giving investors the jitters. On Monday, Humana shares closed at 15.4 percent below the value Aetna offered in the deal, and Aetna’s shares fell 6.4 percent.
Meanwhile, Forbes reports that the acquisition may prompt the larger, resulting health insurer to bring management of prescription drugs in house – a move that could erase Aetna’s contract with CVS Health in 2019.
With the Aetna and Humana deal, Bloomberg reports that pressure is now mounting on other health insurers to make their own deals. The Cigna and Anthem merger could be next on deck, even after Cigna rebuffed Anthem last month.
Why are the big health care providers playing musical chairs all of a sudden? The Wall Street Journal reports that the moves are a result of managed-care companies’ desire to diversify and cut costs in the wake of the Affordable Care Act, especially after the Supreme Court ruled in June that the law was indeed constitutional.
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