A deal could be finalized by the end of the year, The Wall Street Journal (WSJ) reported Wednesday (Nov. 29), citing unnamed sources.
Neither Cigna nor Humana immediately replied to PYMNTS’ request for comment.
The merger would create a new powerhouse in the industry, with a combined market value of approximately $145 billion, according to the report.
By joining forces, Cigna and Humana would have the scale to rival industry giants like UnitedHealth Group and CVS Health, the report said. The merger would also propel the combined company into the top tier of integrated healthcare firms.
This potential merger between Cigna and Humana is not the first time the two companies have explored combining forces, per the report. In 2015, they considered merging, but Humana ultimately struck a deal with another rival, Aetna, which was later blocked on antitrust grounds. Another deal that would have combined Cigna with Anthem also fell through due to antitrust issues.
To address potential antitrust concerns at a time when the Biden administration has signaled increased scrutiny of health industry consolidation, Cigna has been exploring the sale of its existing Medicare Advantage business, according to the report. This divestment could fetch several billion dollars and help alleviate regulatory concerns.
Cigna primarily focuses on commercial insurance, the report said. Its acquisition of Express Scripts Holding in 2018 made it one of the largest players in pharmacy benefits. However, Cigna has struggled to gain a strong foothold in the Medicare market, which is considered the biggest growth engine in the insurance realm. A merger with Humana would address this gap and position Cigna as a major provider of healthcare services.
Humana has also made strategic moves to prepare for a possible merger, per the report. The company announced earlier this year that it would divest its commercial business and focus on its core Medicare Advantage line. Humana’s home-health unit and expanding primary-care footprint would support its Medicare patients.
PYMNTS Intelligence has found that baby boomers and seniors are often overwhelmed by the complexities of health insurance coverage. Only 41% of these consumers are very familiar with the products and services their health insurance covers, according to “The Digital Platform Promise: What Baby Boomers and Seniors Want From Digital Healthcare Platforms,” a PYMNTS and Lynx collaboration.