WSJ: Cigna, Humana exploring insurance mega-merger

A health insurance megamerger is reportedly brewing.

The Wall Street Journal, citing people familiar with the matter, reported on Wednesday that payer giants Cigna and Humana are exploring a combination that could shake up the power dynamics of the industry. The two insurers are discussing an all-cash deal that would be finalized by the end of 2023, according to the report.

Cigna carries an $83 billion market value and Humana's market value is $62 billion, allowing a combined entity to rival the largest players in this space: UnitedHealth Group and CVS Health, WSJ reported.

It would also give Cigna, and its massive pharmacy benefit manager Express Scripts, a much larger foothold in the hot Medicare Advantage market. The two insurers did discuss the potential to merge in 2015, though a deal did not come together, according to the report.

However, should a deal come together, it would face an antitrust environment that's very concerned with consolidation in healthcare. There has been significant conversation on Capitol Hill and in the White House about vertically integrated healthcare companies as the largest players continue to get bigger.

Both Cigna and Humana are intimately familiar with this. Cigna entered into a merger deal with Elevance Health, then operating as Anthem, that was struck down by the courts in 2017. The back-and-forth was acrimonious, and there was a notable rift between the top brass at both companies.

Humana, meanwhile, in that same time frame announced plans to combine with Aetna. That deal, similarly, was blocked by the courts in 2017. Aetna was later scooped up by CVS Health in a $69 billion deal that closed in 2018 after securing a judge's approval.