Bruce Japsen Senior Contributor
Mar 26, 2019, 05:36pm
Fast-growing health insurer Centene is
considering a purchase of rival WellCare Health Plans, according to media reports.
The stock of WellCare jumped in after-hours
trading on a report from CNBC. Shares of WellCare
soared 14% in after-hours trading on the New York Stock Exchange following a day
when health insurance stocks fell on news the Trump administration was
federal courts to strike down the entire Affordable Care Act.
Neither executives at Centene nor WellCare
could be reached Tuesday evening for comment.
Both health insurance companies have been
growing, particular in the business of government subsidized health benefits
but are still much smaller than UnitedHealth Group, Cigna and Anthem.
Centene’s U.S. business under CEO Michael
Neidorff has grown rapidly thanks to the ACA and its subsidized individual
coverage and the expansion of Medicaid benefits for poor Americans. Centene now
manages Medicaid benefits for more than 8 million for states and offers
individual coverage on the ACA’s public exchanges in 20 states.
Centene has nearly 2 million Obamacare
customers and 20% marketshare after entering four new states for 2019 and
expanding in six existing ACA markets where it has already been selling
individual coverage, including markets Anthem, Aetna and UnitedHealth Group
departed.
WellCare, meanwhile, has been growing as well
but is still considered largely a regional player under CEO Ken Burdick even
after it acquisition last year of
Meridian Health Plans of Illinois and Michigan and the MeridianRx pharmacy
benefit manager.
But both Centene and WellCare have been
increasingly getting into the potentially lucrative Medicare Advantage
business, which sells private health coverage to seniors via contracts with the
federal government.
The Trump administration has followed the
Obama administration's lead by changing rules to allow Medicare Advantage plans
to cover more supplemental health benefits. Such rule changes are expected to
result in millions more seniors choosing Medicare Advantage plans over
traditional Medicare.
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