Anthem purchases Cigna

Anthem reached a definitive agreement to acquire Cigna for $54.2 billion in the largest-ever health insurance transaction. The deal, which will have to overcome federal antitrust concerns and be approved by Blue Cross and Blue Shield Association (BCBSA), would create the largest insurer in the United States by membership.

To grow, some insurers are looking to beef up their businesses in high growth government programs markets and the exchanges, or grow their employer business. 

Most of the time, health insurers consolidate to add scale and reduce costs. It can also help to shore up weaknesses and add capabilities. To grow, some insurers are looking to beef up their businesses in high growth government programs markets and the exchanges, or grow their employer business.

Anthem is publicly traded and operates Blue Cross and Blue Shield plans in 14 states. It has a large presence in individual and small-employer plans, and is also a major player in large, multistate employers. Cigna is known for its focus on large employers, and has a growing overseas presence. Anthem said that the businesses have complementary strengths and will add geographic diversity.

Some analysts believe the government will take a critical look at all of the recent proposed health care mergers together. Part of the purpose of the Affordable Care Act (ACA) was to increase competition in health care. Approving these mergers might be viewed as a step back. The industry continues to consolidate and focus on the government as a payer increases.

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