The Hartford Courant reports that Aetna, Inc. plans to acquire Coventry Health Care, Inc. for $5.6 billion in cash and stock. The deal, which needs regulatory approval and is expected to be completed in mid-2013, will give Aetna a larger presence in the Medicaid and Medicare markets.
Analysts say that the federal healthcare reform law – the Patient Protection and Affordable Care Act – is driving more merger and acquisition activity in the insurance industry. The law requires insurers to spend a minimum amount of premium dollars collected on medical expenses, thereby limiting how much profit insurers can make. This limit on profitability causes insurers to seek other ways to grow; namely, through mergers and acquisitions. The Hartford Courant provides a list of recent activity.
