Medicare, Medicaid insurers expected to pursue consolidations in 2015, experts say

January 11, 2015
Industry experts predict a wave of health insurance mergers and acquisitions in 2015 as companies adjust to the new healthcare environment created by the ACA, Modern Healthcare reports. Following a wave of consolidation in 2011 and 2012, some smaller transactions occurred in 2013 and 2014, but large for-profit companies may now make major moves to increase their market share, Susquehanna Financial Group analyst Chris Rigg says. That seems to be especially true of companies specializing in Medicare and Medicaid - such as WellCare, Molina Healthcare, Health Net, and Centene - because analysts expect government-sponsored plans to see the largest earnings growth. Humana largely deals with lucrative Medicare Advantage plans, making it a prime target for acquisition. Although it is smaller than UnitedHealth, Anthem, Aetna and Cigna, it still boasts a $22.4 billion market cap. However, Humana's increasing value makes it less likely to be part of a merger. Some experts expect smaller, regional insurers to form collaborations in an attempt to retain their independence.