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Aetna to purchase Coventry, boost funding

Posted On Fri, August 24, 2012

According to a statement on the company's website, insurer Aetna will purchase fellow insurer Coventry in a merger that will boost the provider's government-sponsored Medicaid funding and enrollment with the planned expansion in 2014.

Medicaid, a state-federal program that provides healthcare for disabled and needy consumers, and Medicare, a program providing subsidized health insurance rates, will potentially be expanded in 2014 under President Barack Obama's Affordable Care Act, depending on the outcome of the election.

States pay insurance providers to offer Medicaid coverage to residents. The funding is based on the percentage of residents using or eligible to use Medicaid within the state. The 2014 Medicaid expansion will grow Medicare enrollment by 8.3 percent, or 19.5 million people.

The $5.7 billion merging deal is expected to close in mid-2013, six months before the President's planned expansion of Medicaid coverage. According to the Los Angeles Times, the deal is actually closer to $7.3 billion with the acquisition of Coventry's outstanding debt.

With the acquisition of Coventry, Aetna will grow its Medicare and Medicaid enrollments, leading to an expected increase in the revenue drawn from government businesses to 30 percent, from 23 percent.

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