Aetna made an aggressive move with its acquisition of Coventry in 2013, and now rumors are swirling that Aetna will soon announce a new acquisition. But this time, the acquisition target may be more than a boutique company like Coventry that would enhance one of Aetna's existing service lines. Instead, it is believed Aetna is poised to announce the acquisition of either Cigna or Humana, giving Aetna a greater national presence and positioning the carrier to possibly challenge the country's largest health insurers, UnitedHealth Group and Anthem, for the most total enrollment.

The potential deal is likely spurred by Aetna's desire to expand its presence in the government payer space, a promising growth area as the Baby Boomer generation ages into Medicare. Humana and Cigna have shown promising Medicare Advantage enrollment growth in recent years.

While an acquisition of Cigna would have a lesser impact on Aetna's Medicare Advantage enrollment, the transaction would be a blockbuster deal that could catapult Aetna to largest carrier in the nation in terms of total enrollment. Aetna and Cigna are among the largest payers in several markets, including North Carolina, and the combination of these two insurers could make them into an even more formidable competitor in these markets.

The Humana acquisition would make the combined company the largest Medicare Advantage insurer in the country, leapfrogging current leader UnitedHealth Group. Humana's brand recognition and favorable reputation among Medicare beneficiaries certainly make it an attractive acquisition target. Humana also has a strong presence in several states, health insurance exchanges in which Aetna is not a player. Through an acquisition with Humana, Aetna would be able to increase its enrollment in public service lines without cannibalizing its successful commercial lines of business.

Either acquisition would also enhance Aetna's care coordination and accountable care portfolio, and could lead to the development of new cost-containment strategies. This would further assist Aetna in challenging UnitedHealth and Anthem, and could attract new provider partners. Integration of a large, national insurer will expand Aetna's already-strong portfolio and drastically change the national landscape for health insurers.

For more information on healthcare M&A, follow Sarah on Twitter: @SarahWilsonDRG.

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