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Life Health > Health Insurance > Health Insurance

Why would a health insurer buy THAT?

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Health insurers have announced a flurry of small acquisitions in the past three months.

At a high level, the health insurance mergers and acquisitions market has been so quiet that analysts at Moody’s did not bother to include a discussion of M&A activity in their latest health care quarterly publication.

But, down in the weeds, insurers have been making deals to equip themselves for a world reshaped by the Patient Protection and Affordable Care Act of 2010 (PPACA).

See also: PPACA open enrollment 2015: Popcorn time

One reason for a lack of big insurer-insurer M&A announcements may be PPACA itself: Carriers may want to know what 2014 claims experience really looked like, and how the PPACA “three R’s” risk-management programs — the reinsurance, risk-adjustment and risk corridors programs — will really work before trying to acquire something with a value that policymakers might soon re-set.

See also: How dangerous are those PPACA plan members?

But several of the recent deals that have been announced reflect insurer’s efforts to respond to PPACA incentives to focus more on cutting the cost of managing the care of poor people and sick people, rather than holding claims down by using medical underwriting to reduce the initial level of morbidity risk.

Another high-profile deal involves exchange technology.

One might be a traditional market-expansion deal but comes with an only-in-PPACA World wrinkle.

To learn more about recent health insurer deals, read on.


Buyer: Anthem Inc. (NYSE:ANTM)

Bought: Simply Healthcare Holdings Inc.

Price: Not disclosed.

Why? The government plan market.

Simply Healthcare is an insurer that runs Medicare and Medicaid plans in South Florida, with 170,000 Medicaid enrollees and 22,000 Medicare enrollees. It also offers the Clear Health Alliance, an HIV/AIDS special needs plan with 9,000 enrollees.

Anthem already has 500,000 Medicare and Medicaid plan enrollees in Florida, but a majority are in central Florida.

Joseph Swedish, the president of Anthem said the deal “aligns with Anthem’s strategy for continued growth in our government business division.”

Swedish noted that the Simply Healthcare HIV/AIDS special needs plan is one of just four of its kind in the United States, and that there are 106,000 people with HIV living in Florida alone.


Buyer: Molina Healthcare of Florida Inc., a subsidiary of Molina Healthcare Inc. (NYSE:MOH)

Bought: The Florida Medicaid business of First Coast Advantage L.L.C.

Price: Not disclosed.

Why? The government plan market.

Molina has already been managing Medicaid plans in Florida, and the deal with First Coast, a provider-owned carrier, adds 63,000 Medicaid managed care plan enrollees in the Jacksonville area.


Buyer: Aetna Inc. (NYSE:ANTM)

Bought: bswift

Price: $400 million.

Why? The exchange market.

Bswift develops benefits administration systems and runs a retail health insurance system for health insurance exchange programs and employer health benefits programs.

Mark Bertolini, Aetna’s chairman, said his company bought bswift to bolster its own private health insurance exchange program.

Aetna wants to use the bswift technology in a new, worker-friendly private exchange system for employers, Bertolini said.

 Doctor with a patient

Buyer: Centene Corp. (NYSE:CNC)

Bought: LiveHealthier Inc.

Price: Not disclosed.

Why? Care management.

Centene managers say LiveHealthier has developed good tools for motivating health plan enrollees in employer, union and government health plans to take better care of themselves.

Hoboken, N.J.

Buyer: Cigna Corp. (NYSE:CI)

Bought: QualCare Inc. and QualCare Alliance Networks Inc.

Price: Not disclosed.

Why? New Jersey.

QualCare is Piscataway, N.J.-based managed care carrier with 800,000 enrollees in New Jersey’s expensive, highly concentrated health insurance market, and the alliance networks affiliate is a provider network organization that has been controlled by an alliance of 16 nonprofit hospitals and physician-hospital organizations.

The network arm has relationships with self-funded plans with about 200,000 enrollees.

QualCare is the network provider for Health Republic Insurance of New Jersey, New Jersey’s CO-OP plan. Acquiring QualCare might be a way for Cigna (NYSE:CI) — a company that has largely avoided close contact with the PPACA exchange system  — to learn more about what goes on there.


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