Anthem proposes to buy Cigna for $184 per share
Source: AP
NEW YORK (AP) After getting the cold shoulder, U.S. health insurer Anthem Inc. said it's raising its offer to buy smaller rival Cigna Corp. for about $47 billion, including cash and stock.
Indianapolis-based Anthem said Saturday it's proposing $184 per share, about 31 percent of that would be in Anthem shares and the remainder in cash. The offer represents a premium to Cigna's stockholders of 18 percent over Cigna's closing stock price on Friday. It said the bid also represents a premium of 35.4 percent based on the closing price of Cigna's shares on May 28 when reports of industry merger talks began. Anthem said the total transaction is valued at nearly $54 billion, including debt.
The announcement comes as investors have been speculating for weeks about the possibility of a major acquisition in a sector where size is becoming increasingly critical. Health insurers also have been hoarding cash from recent strong quarters and doing little to tamp down merger talks. Last month, there were reports that another rival, Humana, Inc., was exploring a sale of itself. Some analysts predict that the nation's five biggest health insurance carriers, which also include Aetna and UnitedHealth Group, will eventually consolidate into three.
Anthem said it has been in talks with Cigna, based in Bloomfield, Connecticut, to explore a potential combination since August 2014 and said it made its proposal public because the companies have not been able to come to an agreement. The company also said it has submitted four written proposals since early June, and made previous offers of $174 per share and $178 per share, according to a letter written by Anthem's CEO Joseph Swedish to Cigna's board of directors that it made public Saturday. But Anthem said that a big stumbling block has been what role David Cordani, CEO of Cigna, is seeking to have at the combined companies.
Read more: http://www.chron.com/business/article/Anthem-proposes-to-buy-Cigna-for-184-per-share-6339484.php
Algernon Moncrieff
(5,790 posts)On one hand, it seems to be working, so the thought of a buyout does not thrill me. OTOH, larger company = larger economies of scale = better negotiated rates and possibly better/larger netwoeks of doctors & dentists.
awoke_in_2003
(34,582 posts)not liking it a bit. The wife spent a week in the hospital because of strokes. Cost to me? $200. If she has to go back in for anything for the rest of the year, the cost will be zero. I do not want a change.
Algernon Moncrieff
(5,790 posts)I think that's what's on my schedule for the ER -- and you are right; as long as the hospital and docs are on the plan, you are covered. The only hole I have in my coverage is radiology. I get billed for that up to deductible, and then it's 80/20 to some limit.
awoke_in_2003
(34,582 posts)live about 2 minutes from the hospital. It was my annual deductible. If we ever need an ambulance ride it is paid for- the fire department runs our ambulance service. If our city ever privatizes it I will move.
Algernon Moncrieff
(5,790 posts)We have a $200 ER deductible. The thought process is to discourage people from going to the ER with severe flu or mino injuries, and to instead steer them toward an acute care (read: doc in the box) facility.
csziggy
(34,136 posts)They both suck. Anthem seemed to be worse about denying claims - the insurance clerks at my doctors' offices always told me to not pay the bill until they'd run it through the system at least three times.
CIGNA wasn't quite as bad. The worst problem I had with them is none of my providers were in network. Since I had been using those providers for at least a decade by the time the insurance was switched to CIGNA I was not going to change doctors just to suit them.
CIGNA did seem to have a better nurse line for when I had medical questions or needed help getting referrals.
The insurance for both was provided by my husband's employer. Although he didn't change employers for 13 years, the insurance provider changed on average every two or three years. Every time the in network coverage shifted - and we had no choice over which insurance we would get.
Algernon Moncrieff
(5,790 posts)I've been lucky: my company self-insures part of it's health care, and basically lets CIGNA run it on an excess-of-loss basis (a pretty common practice among companies the size of my employer). We've had CIGNA for 13 or so years; prior to that, my wife and I had employers that changed insurers every other year. As a result, we lost our doctors and had to find new ones, and then would lose them and have to switch back. Add to that the practices that drop whatever insurance you carry, and it leads to the question: Who the Hell does get to keep their doctor these days?
The issue with CIGNA used to be that they were painfully slow payers, which accounts for the lack of in-network providers. In certain parts of the country, they are just not a popular insurer. So, if your company is based in Connecticut, and you are in a field office in Peoria, IL -- CIGNA may be a sucky choice.
Unfortunately, my employer is too big for me to use the ACA. In a perfect world, I'd rather just get an allowance from the employer and go to the exchanges. I could then get Blue Cross, which is a much more popular choice in my area.
csziggy
(34,136 posts)Just like yours.
We're now with a policy subsidized by the ACA. My husband's health was suffering because of the stress of his job. It was either make him keep working for insurance we hated or let him retire, reduce our income and get insurance through HealthCare.gov. With the subsidy we're paying $165 a month and were able to select a policy that covers all our long term providers. Unfortunately our insurance is through Assurant who has announced they will not be offering a ACA policy next year. Too bad, since I have been satisfied with Assurant. It's not perfect but it's as good as anything we had from my husband's employer.
If the Supremes knock out the subsidy we'll just have to dip into our savings to pay for insurance. We both turned 63 this year so will be eligible for Medicare soon.
Algernon Moncrieff
(5,790 posts)Tax deductions and credits for the buyer will be put in place. More outlay up front, but you'll get the money on the back end at tax refund time. Something will be figured out.
csziggy
(34,136 posts)So they can keep getting their money. (The ambiguous pronouns in that phrase fit however you want to view them.)
catrose
(5,067 posts)An HSA through my employer with a $2500 deductible. And just try to get an answer out of them!
Algernon Moncrieff
(5,790 posts)Annual checkups, well woman visits, etc.?
catrose
(5,067 posts)just pays nothing else until I've paid $2500. I've never had a plan like that before, always copays even before meeting the deductible. I talked to somebody at healthcare.gov, but she said I had to use my employer's plan.
Man from Pickens
(1,713 posts)Corporate oligopolies do not act for you benefit. What you are likely to see is price hikes as there will be one less competitor to undercut their offerings. Should you be unfortunate enough to be in an area served by only these two companies you're going to get reamed.
DebJ
(7,699 posts)My sister has been stuck with them through her employer for some years. She just got a back xray approved.....THREE YEARS OF TRYING TO GET IT DONE. She has many health issues with Marfins syndrome; her entire skeleton is slowly collapsing, and it took them 3 freaking years to approve an XRAY. Just one of a very long line of horrific things she has been through with Cigna. But I heard Cigna horror stories long ago, decades ago, before my poor sister was inflicted with their incredibly expensive non-coverage. I myself had them for two years many decades ago, and it was a nightmare then, too.
rurallib
(62,416 posts)competition goes away, every body gets screwed. Today's America.
Algernon Moncrieff
(5,790 posts)We may eventually end up with private single payer, which isn't necessarily all bad (my understanding is that it's what Germany has). One company; hopefully well regulated; that basically handles everyone's healthcare. Kinda like the old AT&T.
I think what's more likely is what we have in wireless. 2-3 major players (e.g. AT&T, Verizon, Sprint) 3-5 niche market/alternative players (e.g. Boost, Cricket, US Cellular, Virgin, TracFone).
rurallib
(62,416 posts)It exists in most every industry and it is not healthy.
And in my mind that is not what anyone means by single payer. Not one insurance company controlling health care. That sounds like a nightmare to me.
mia
(8,361 posts)...replacing the present one, and that's just not in the political cards. Right now you can invest here with confidence."
http://seekingalpha.com/article/3264555-health-insurer-consolidation-aims-for-market-control
It's all about health insurance wealth - for stockholders.
awoke_in_2003
(34,582 posts)they regulate their insurance companies, we don't and probably never will.
Algernon Moncrieff
(5,790 posts)Yavin4
(35,440 posts)Natural monopolies can work until an Enron comes around.
Algernon Moncrieff
(5,790 posts)You are right - pre deregulation utilities are a great example. You are granted a monopoly and basically guaranteed a reasonable profit in exchange for regulatory oversight over your rates.
mia
(8,361 posts)All this is being done in the name of cost containment, higher profits, and political power. Vertical integration keeps costs down, market control means higher profits, and the combination means the winners can resist any drive to cut profits by a future Democratic Administration. It could also line up insurer management to take political control of the U.S. health care system in the event of a Republican victory, because while companies like United Health have been the biggest beneficiaries of "Obamacare," they still contribute more to Republican candidates than Democratic ones....
Some bits of the last half-decade's gains are at risk. In the near term, a Supreme Court decision against Obamacare could cause stock prices to drop. But that will be a temporary phenomenon, a buying opportunity. Because the gains being made through automation, vertical integration of services and a focus on wellness are permanent. Insurers won't just toss away these savings. And if a Republican administration gives them more pricing flexibility -- perhaps at the cost of a few million contracts -- the remaining players will adjust....
The only real risk to health insurance wealth lies in something like a single-payer system replacing the present one, and that's just not in the political cards. Right now you can invest here with confidence.
http://seekingalpha.com/article/3264555-health-insurer-consolidation-aims-for-market-control
Algernon Moncrieff
(5,790 posts)I think the first thing a Republican administration will give them is more flexibility to cross state lines. That will lead to consolidation.
Doctor_J
(36,392 posts)Both make their profits through death.
Algernon Moncrieff
(5,790 posts)I have friends that work in the medical side as well as pharma. They like the money, but at some level all of them do want to help people and extend lives. Dead people can't buy years of expensive treatment.
Now the mortuary business.......
Doctor_J
(36,392 posts)Drug stocks are also through the roof. My own annual max went up by $8000. Thanks to the greatest legislative achievement since social security!!!
Doctor_J
(36,392 posts)altogether, making price fixing a slam dunk. It will be similar to your tv choices, except of course the life or death aspect. I'm so glad we have for profit health insurance. American exceptionalism. It's what makes this country great.
wilt the stilt
(4,528 posts)as it will have to get by antitrust. As it is Blue cross is in a big antitrust right now so this might not take place.