Aetna buys Coventry Health Care in latest deal to divvy up Medicare/Medicaid expansion market

Aetna today announced it will buy competitor Coventry Health Care for $7.3 billion, which includes an assumption of Coventry’s debt.

The deal will “substantially increase [Aetna’s] Medicaid footprint” and grow its Medicare Advantage and Medicare Part D business, Aetna CEO and President Mark Bertolini said in a webcast. The transaction is projected to create “double-digit returns on invested capital in 2015,” he added.

As insurers jockey for positioning within the national Medicare portfolio, Aetna’s announcement is the third major insurer consolidation deal in the past 10 months.

July 2012 – WellPoint agreed to buy Medicaid managed care company Amerigroup for $4.4 billion: Through the acquisition, WellPoint inherited Amerigroup’s contract relationships with eight new states. But the jury is still out on how WellPoint’s risk will play out; several of the former Amerigroup states have vowed to opt out of Medicaid expansion, including Florida, Louisiana and Texas.

October 2011 – Cigna agreed to purchase Healthspring for $3.8 billion: The deal added more than 800,000 Medicare Prescription Drug Plan customers and 340,000 Medicare Advantage members to Cigna’s business plan.

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