Aetna to buy Coventry Health Care for over $5.5 billion

Scott Tong Aug 20, 2012

Aetna to buy Coventry Health Care for over $5.5 billion

Scott Tong Aug 20, 2012

Jeff Horwich: Shares of the insurance giant Aetna are looking awfully healthy this morning. Acquiring another insurer is likely providing a bit of a shot in the arm. It’s the latest in a stream of health insurance mergers we’ve been charting — many of them happening for the same reasons.

From Washington, here’s Marketplace’s Scott Tong.

Scott Tong: Aetna is buying Coventry Health Care for more than $5.5 billion. That gives Aetna a bigger foothold into the elderly Medicare market, where the government’s the main customer, instead of private companies.

And that’s the growth market, says Chas Roades. He’s with the Advisory Board company, a health care research firm.

Chas Roades: All of the insurers realize the traditional commercial risk business where they’re insuring individuals through employer contracts is a shrinking business. The population is aging. Over time, 79 million baby boomers are going to age into the Medicare program and leave the commercial rolls.

Another big pool of insurance customers is Medicaid recipients. The program for low-income Americans will expand under the health reform law.

Aetna’s not the only busy firm. Cigna and Wellpoint have just made their own deals, to sell more Medicare and Medicaid products. They all assume the future’s with the government, and it’s here to help.

In Washington, I’m Scott Tong for Marketplace.

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