Aetna to Buy Humana

Have you heard that Medicare Advantage plans have no future?  If that is true, why are the biggest insurance companies buying other insurance companies that focus on Medicare Advantage?

An article from the Hartford Courant  says:

Aetna to buy Humana Inc. for $37 billion.

Humana is an attractive addition to other giant insurance companies because of its strength in Medicare prescription plans and Medicare Advantage plans. The retirements of the baby boomers are swelling Medicare’s rolls.

According to a Bloomberg analysis, Aetna now gets 24 percent of its revenue from Medicare business. The combined company would get about 47 percent of its revenue from Medicare and Medicaid.

The merger announcement forecasts $1.25 billion in operating cost reductions. How much of those efficiencies will require job reductions is unknown. Aetna has 6,100 employees in Connecticut, the most of any health insurer in the Insurance Capital.

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