Centene's $17 billion buy of rival WellCare was a pivotal purchase, catapulting it into the third-largest publicly traded managed care company, just behind UnitedHealthcare and Anthem. It's the fourth-largest insurer when including Aetna, which is now part of CVS.

The deal —​ Centene's largest to date and the biggest payer tie-up this year — comes on the heals of the massive CVS-Aetna deal and goes beyond just Medicaid, Centene's core business. When completed, Centene's Medicare footprint will more than double, morphing it into an even more influential player in government programs.

Focusing on those programs turned into a winning strategy for Centene.

"We liked it because at the time it was not in direct competition with the other large commercial payers and it was a way to get significant volume quickly," Michael Neidorff, CEO of Centene, told Healthcare Dive. "It was a nice way to build a niche business versus competing with the commercial players," he said.

The WellCare buy enables Centene to bolster its government programs footprint, Dean Ungar, an analyst for Moody's, told Healthcare Dive. "What it does for Centene more than anything else is it gives them a much better position in Medicare Advantage, where they haven't been strong," Ungar said.

Centene is already the No. 1 player in the Affordable Care Act exchanges with about 2 million customers. Its expertise managing low-income populations gave it a competitive advantage over peers, some of which struggled on the exchanges and later exited. In many cases, Centene uses the same provider network as its Medicaid business and targets customers likely to churn on and off Medicaid and are already familiar with Centene.

Together with WellCare, Centene is positioning itself to be the leader in government-sponsored healthcare programs. While it already dominated the top spot as the largest Medicaid managed care provider, it will move ahead of Cigna and claim the fifth spot in the lucrative MA market, among publicly traded insurers including Aetna.

Combined, the company will cover 22 million people across all 50 states and generate nearly $100 billion in annual revenue. 

It's a far cry from where the company started in 1984 as a single Medicaid plan in Milwaukee. Though, throughout its history the company has made key acquisitions as it aimed to increase scale. More recently, Centene acquired Fidelis Care in New York, giving it sizable share in one of the largest Medicaid markets.

It's also been a good bet for Centene investors. Shares are up 30-fold since the company went public in 2001, and closed at $61 Dec. 6. Centene's stock is up about 7% year to date, compared to the 15% rise in the stock of insurers and other healthcare services broadly, according to the S&P Healthcare Services Index.

The focus on government programs comes as more people rely on the programs for their health insurance needs, in particular under the ACA's coverage expansion, including Medicaid.

Medicaid plays a significant role in millions of lives across the country. It covers nearly half of all births, provides coverage to one out of every five Americans and plays a critical role caring for low-income seniors with disabilities. Through the WellCare deal, Centene will add 5.5 million Medicaid members.

Still, Medicaid managed care is challenging and it's a low-margin business, Ungar said.

"You have to kind of know what you're doing. Centene has proven that they know what they're doing. They have a very high win rate on contracts and it's a real expertise. They stack up well in Medicaid," Ungar said.

And more seniors are choosing MA over traditional Medicare plans. This year, 22 million seniors were enrolled in MA plans, making up one-third of all Medicare enrollees.

But the deal does come with some risk, including increased debt and integration risk, analysts have said. Plus, even if unlikely, Democratic presidential hopefuls have wooed crowds by promising "Medicare for All," which calls for eliminating insurers' roles in private insurance.

The most extreme plan, which calls for abolishing the private sector, would be an existential threat to the whole industry, Ungar said. However, he added: "I think the likelihood of that is extremely low."