CVS expanded through IlliniCare Health Plan

The combined carrier formed by Centene and WellCare will have a greater market share with respect to number of enrolled lives. Centene and WellCare had to divest some of their entities to go ahead with the deal. Centene signed a definitive agreement with CVS to divest its Illinois health plan subsidiary, IlliniCare Health Plan. The transaction involves Centene’s Medicaid and Medicare Advantage line of business. Centene will retain IlliniCare’s Medicare-Medicaid Alignment Initiative business and IlliniCare's statewide YouthCare foster care contract, commenced in February 2020. Centene's Ambetter business in Illinois will not be affected by the transaction. In 2018, CVS acquired Aetna for $69 billion and expanded its portfolio further into the health insurance market.

More enrolled lives for CVS’ Medicare Advantage and Medicaid

CVS gained many lives under the Medicare Advantage business which will help it to compete with players like UnitedHealth Group, Humana, and others. Overall, around 8,000 lives were added to CVS’ Medicare Advantage profile and more than 350,000 lives were added to its Medicaid profile. However, Centene will continue to offer Medicaid plans in Illinois through WellCare’s Meridian Health plan, which covers approximately 800,000 enrollees. "Expanding our Medicaid and Medicare Advantage presence in Illinois will allow us to serve more members with our proven holistic approach that addresses physical, behavioral and social determinants of care," said Karen Lynch, executive vice president of CVS and president of Aetna. Financial details of this transaction were not disclosed.

Anthem expanded in Nebraska and Missouri by 300,000 Medicaid lives

WellCare divested its Nebraska and Missouri Medicaid health plans to Anthem to go ahead with the Centene deal; terms of the deal were not disclosed. Anthem offers Blue Cross Blue Shield plans in 14 states and it will gain approximately 300,000 Medicaid members through this deal. "We look forward to working with our state partners to serve Medicaid members in Missouri and Nebraska with our innovative care management programs designed to improve health outcomes among the most specialized populations," Anthem President and CEO Gail Boudreaux said.

Factors that make Medicare and Medicaid fastest growing segments

Medicare and Medicaid are the fastest growing segment of the health insurance market. According to CMS, Medicare and Medicaid spending are expected to grow at 7.6 percent and 6 percent, respectively, per year from 2020 to 2027. Increase in enrollment due to ageing baby boomers and growth in the use of covered services are expected to propel Medicare’s spending growth. Every day 10,000 baby boomers age into the program making it the fastest growing segment. Medicaid’s enrollment mix will be influenced by comparatively more expensive aged and disabled members. CMS also noted that the increased number of plans offered for Medicare Advantage by different players in 2020 might lead to a 14 percent decline in Medicare Advantage premium costs as compared to 2019.

It would be interesting to see how different players foray or expand into the government-sponsored healthcare market. Mergers, acquisitions, and partnerships by payers are anticipated to continue to offer integrated services in this segment.

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