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Aetna will buy its rival Humana and spend more like 37 billion dollars counting the assumed debt.  This cash and stock deal announced early today, Friday, July 3^rd 2015, will make Aetna a big player in the rapidly growing Medicare Advantage business.  Humana has nearly 3.2 million people enrolled in Medicare Advantage plans. 

Based in Hartford, Connecticut, Aetna announced this deal one day after the Medicaid provider Centene announced it would spend 6.3 billion dollars to buy fellow insurer Health Net. 

Aetna has become the latest health insurer to take advantage of government business. The industry is in motion to adjust to the federal health care overhaul. 

Shares of Aetna and Humana closed at $125.51 and $187.50, respectively, yesterday.  Markets closed today, Friday, for the 4^th of July holiday.

One of the reasons health insurers are combining is because these megabillion dollar deals provide a fusion of new business when growth has slowed with employer-sponsored health coverage.   More employers are opting to pay their own insurance claims and hire insurers to administer the coverage, which is less lucrative for managed care companies.

Mergers allow companies to diversify their products immediately.  They save money by joining back-office functions and eliminating overlapping jobs.

The combined company of Aetna and Humana will cover more than 33 million individuals.  Only UnitedHealth Group, Inc. and the Blue Cross-Blue Shield carrier Anthem Inc. cover more.  Aetna’s leader, Mark Bertolini, will serve as chairman and CEO.

lonce@adjustercom.com ; Lonce LaMon, journalist