- Health insurer Anthem has agreed to buy competitor Cigna for $54.2 billion in cash and stock.
- The deal, if it clears regulatory hurdles, would create an insurance giant that covers more than 53 million people.
- It comes only weeks after Aetna agreed to acquire Humana as consolidation continues in the health insurance industry.
It doesn't take much insight to see the potential consequences of this deal, as the Big Five insurers might suddenly shrink to three. And it's a hefty premium Anthem is paying for the acquisition -- $188 a share, or more than 38 percent above Cigna's close on May 28 when news of the potential deal first surfaced, The New York Times notes.
"We believe that this transaction will allow us to enhance our competitive position and be better positioned to apply the insights and access of a broad network and dedicated local presence to the health care challenges of the increasingly diverse markets, membership, and communities we serve," Anthem President and CEO Joseph Swedish said in a statement.
That is one way to look at it. Federal regulators might look at the Anthem-Cigna and Aetna-Humana megamergers in a different light. Their current sizes already give them substantial leverage in the ongoing battle over healthcare costs and reimbursements, and the costs of these mergers has to come from somewhere.