Bruce Japsen, Senior Contributor
Mar 27, 2019, 08:00am
Centene's decision to buy WellCare Health
Plans for more than $15 billion gives the combined national health insurer a
stronger presence in the fast-growing Medicare Advantage business.
Both Centene and WellCare are in similar
government health insurance businesses and better known for administering
Medicaid benefits for poor Americans in contracts with states across the
country. Centene also sells subsidized individual coverage known as Obamacare
in 20 states under the Affordable Care Act and boasts 20% market share in
that business.
On Wednesday, Centene said its proposed
acquisition of WellCare gives the combined company 22 million
members in all 50 U.S. states and combined 2019 revenues of $97 billion
based on projections the companies have made.
With the Trump administration and Republicans
in Congress constantly threatening the
ACA’s individual coverage known as Obamacare as well as the ACA’s Medicaid
expansion, a more certain bet for health insurers these days could be in
administering Medicare benefits for seniors. Medicare Advantage plans contract
with the federal government to provide extra benefits and services to seniors,
such as disease management and nurse help hotlines, with some even
providing vision and dental care and wellness programs.
The Trump administration is changing rules to
allow private health insurers to offer more benefits in Medicare Advantage
plans they sell. And Centene and WellCare are already fighting with rivals and
startups to take advantage of more than 10,000 baby boomers turning 65 every
day to become eligible for Medicare.
An acquisition of WellCare will allow Centene
to gain scale in more markets and potentially better compete with bigger
players in the Medicare Advantage business like Humana, UnitedHealth Group and
CVS Health’s Aetna health insurance business.
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