A report from Reuters last week said Cigna is looking to sell its Medicare Advantage business, which covered 600,000 people as of September. A Cigna spokesperson said the company does “not comment on rumors or speculation.”
Cigna is a very small player in Medicare Advantage, and its MA plans have been messy and controversial since it bought HealthSpring in 2012. But Cigna’s MA business is still sizable, growing, and profitable — a highly desirable asset for an insurance company willing to spend billions. There could be a bigger move being planned, though. At least that’s what Scott Fidel, a health care stock analyst at Stephens, is thinking.
“We would see this action being one component of a potential pursuit of [Humana] as acquisition target, with the divestiture being a proactive move to reduce antitrust risk,” Fidel wrote in a note to investors last week. In other words, Cigna (which is mostly employer and commercial health insurance) and Humana (almost entirely Medicare Advantage) would have no insurance overlap that would immediately trigger antitrust review.
There’s one issue: A combined Cigna-Humana would still have a lot of overlap with their pharmacy benefit managers. Cigna owns Express Scripts (second-largest PBM, according to Adam Fein of Dr-g Channels), and Humana owns the fourth-largest PBM. Given how Lina Khan’s Federal Trade Commission already is scrutinizing PBM market power, it seems like that kind of deal would be an insta-block.