Insurer Aetna to buy Humana in $37B deal

FILE - In this Tuesday, Aug. 19, 2014, file photo, a sign for Aetna Inc., sits atop a building at the company headquarters in in Hartford, Conn. Health insurer Aetna Inc. has made a deal to buy competitor Humana Inc. in a $37 billion deal the companies say would create the second-largest managed care company, it was announced Friday, July 3, 2014. (AP Photo/Jessica Hill, File)

HARTFORD, Conn. (AP) — Aetna will spend $37 billion to buy rival Humana in a deal that would significantly bulk up its government business and create the nation’s second-largest health insurer

The cash-and-stock acquisition, announced early Friday, would make Aetna a sizeable player in the fast-growing Medicare Advantage business, which offers privately run versions of the federally funded health care program for the elderly and people with disabilities.

Humana is the nation’s second-largest provider of Medicare Advantage plans. It also offers state- and federally funded Medicaid coverage and Tricare coverage for military personnel and their families.

The purchase price includes a combination of cash and stock worth about $230 per share.

The combined company may not retain its title of second-largest insurer for long. Health insurers have been pushing to consolidate for weeks, in part due to the health care overhaul’s impact on the industry. Blue Cross-Blue Shield carrier Anthem has made a $47 billion offer for another insurer Cigna.

On Thursday, Medicaid coverage provider Centene announced a deal $6.3 billion deal to acquire Health Net.

Health insurers can quickly diversify their products with a big deal, and they improve their technology capabilities and can save money by combining back-office functions.

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