In a potential move that could reshape the U.S. health insurance landscape, health insurer Cigna is reportedly in merger talks with Humana, according to a source familiar with the matter. This development marks the latest episode in the ongoing trend of consolidation within the health insurance industry, with major players seeking strategic partnerships to navigate evolving market dynamics.
The Shifting Landscape of US Health Insurance: Cigna’s Merger Talks with Humana Signal Industry Consolidation
The backdrop of this potential merger includes past attempts at consolidation within the industry, some of which faced regulatory challenges. In 2016, the U.S. Department of Justice intervened to prevent two mega-mergers: Anthem’s proposed acquisition of Cigna for $54 billion and Aetna’s planned $34 billion purchase of Humana. The antitrust concerns raised by the Department of Justice centered on the potential for higher prices resulting from reduced competition.
The proposed mergers in 2016 were influenced, in part, by the implementation of the Affordable Care Act in 2014. While those specific deals were thwarted, subsequent years witnessed a series of strategic moves and mergers within the health insurance sector:
- 2015 – UnitedHealth’s Acquisition of Catamaran: UnitedHealth acquired pharmacy benefit manager Catamaran for $12.8 billion, integrating it into its existing OptumRx drug benefit unit.
- 2015 – CVS Health’s Acquisition of Omnicare and Target Pharmacies: CVS Health acquired Omnicare, a provider of pharmacy services to long-term care facilities, for more than $12 billion. Additionally, CVS Health acquired Target’s 1,600-plus pharmacies an
- d retail medical clinics inside Target stores for nearly $2 billion.
- 2017 – CVS Health’s Acquisition of Aetna: CVS Health announced plans to acquire health insurer Aetna for $69 billion, marking the largest-ever healthcare merger. The rationale included anticipated cost savings through streamlined services and enhanced patient care.
- 2018 – Cigna’s Acquisition of Express Scripts: Health insurer Cigna announced plans to acquire pharmacy benefit manager Express Scripts for $52 billion, aiming to optimize administrative and patient care costs.
- 2018 – Anthem’s Transition from Express Scripts to CVS Health: Anthem announced it would not renew its pharmacy benefit management relationship with Express Scripts and entered into a new contract with CVS Health.
- 2018-2019 – UnitedHealth’s Acquisitions: UnitedHealth acquired the primary and urgent care services of DaVita for $4.3 billion in June 2019. In March 2022, UnitedHealth announced the acquisition of LHC Group for $5.4 billion, and the deal closed in February 2023.
- 2022-2023 – CVS Health’s Acquisitions: CVS Health continued its expansion with the acquisition of at-home health company Signify Health for roughly $8 billion in September 2022. In February 2023, CVS Health entered into a definitive agreement to acquire primary care center operator Oak Street Health for around $10 billion, with the deal closing in May 2023.
As Cigna engages in merger talks with Humana, the industry watches closely to assess the potential impact on competition, healthcare services, and the broader health insurance landscape. The proposed merger signifies a strategic response to ongoing market challenges and opportunities for enhanced operational efficiency.
