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The companies are discussing a stock-and-cash deal that could be finalized by the end of the year, according to the report, without providing details on the deal value.
A Humana and Cigna combination would give the merged company the scale to rival UnitedHealth Group (NYSE:UNH) and CVS Health (NYSE:CVS). Cigna’s large pharmacy benefit unit, which manages prescription drug plans, and its strength in commercial insurance would be joined with Humana’s strong position in the fast-growing market for Medicare Advantage plans.
Humana, which has a market value of roughly $63 billion, declined to comment. Officials at Cigna, which has a market value nearly $84 billion, did not respond to requests for comment.
The health insurance industry’s last round of consolidation was triggered by the Affordable Care Act of 2010, the national healthcare reform law that created new individual insurance options and expanded Medicaid. But some planned deals fell apart after push back from antitrust authorities.
In July 2016, the Justice Department filed lawsuits against two health insurance mergers on the same day. One was Anthem’s – now Elevance Health – planned purchase of Cigna. The second was Aetna’s proposed acquisition of Humana.
Both sets of companies fought the government and both lost. Cigna had tried to buy Humana before losing out to Aetna’s bid. Aetna was ultimately gobbled up by CVS Health.
Bill Baer, who was at the Justice Department when the 2016 lawsuits were filed, said that talk of Cigna and Humana merging was “surprising” given the government successfully stopped two big health insurance mergers just a few years ago.
Cigna’s shares were down more than 6%, while Humana’s stock was off by more than 2%.
Humana is the second biggest player in the market for Medicare Advantage plans. Cigna has a much smaller Medicare Advantage business which Reuters has previously reported was up for sale.
