By Mitchell Young
WOONSOCKET, RI: Aetna [NYSE: AET] CEO Mark Bertolini probably won’t be enjoying the commanding view of the New York City skyline from his New York headquarters, next year.
CVS Health Corp. [NYSE: CVS} wants his company and they are reportedly willing to put up the bucks to take it, $200 per share, more than $66 billion.
Aetna shares rose more than 11%, [$18.48] this morning , to $178.60, on the speculation of the deal and the $200 price tag. Shares of Aetna have traded as low as $104 within the past year.
Aetna has approximately $64 billion in revenues and $2.2 billion in annual profits. CVS generates more than $5.5 billion in profits from $170 billion plus in sales and has a $74 billion market value. Aetna before the speculation had a market value of $65 billion. Reports are, that based on the similarity in market value size, the merger will likely include, stock and cash to fund the payday.
While most of us know CVS, originally Consumer Value Stores from their ubiquitous “drug stores,” the company makes much of its money as one of the nation’s largest Pharmacy Benefits Managers [PBM]. Ironically the profits that PBMs generate and that is providing the "quan" to fuel the takeover, are themselves under scrutiny by insurers, major employers and healthcare regulators as excessive.
CVS’s PBM negotiates drug benefits for health insurance plans and employers, and is seen as taking an aggressive stance in price negotiations with drug makers. Consumer advocates however, have questioned, whether PBMs themselves rather than consumers are seeing the benefit of this market power.
USA Today reported in 2014, that “while all the cutting goes on in health care, one of the biggest and least understood players [PBMS] are getting bigger and richer.”
A merger with Aetna could provide even more leverage in its price negotiations with drug makers, but could underscore as well, that the profits CVS’s PBM make as an intermediary should also be on the chopping block, as industry price pressures continue.
Aetna at 164 years has been based in Hartford for all that time. Apparently, the company is being driven into an early retirement by the Obama administration's scuttling of their merger with competing health plan Humana in 2016.
While the details have emerged about the possible deal, a final agreement is neither assured or likely to come this week.
The discussions have gone on for a few months and are reported to be primarily between CVS Chief Executive Officer Larry Merlo and Aetna's Bertolini. Neither company has commented, but that is likely to change with the pricing information now in the market.
While Obama administration officials probably wouldn’t admit it, several “writers” behind the Affordable Care Act have said they were seeking consolidation of the healthcare industry, as a means to reduce costs. The proposed consolidation of Anthem and Cigna, and Aetna, Humana that resulted however, created a backlash from the public and many healthcare providers and the merger was eventually rejected by the Obama administration.
Connecticut's U.S. Senator Richard Blumenthal was among the biggest critics of the Aetna, Humana merger. Three months after the deal was nixed, Bertolini announced his decision to move Aetna’s headquarters to New York.
One thing to watch is whether CVS, with its low-cost retail culture will keep its headquarters in Woonsocket, rather than move to the Big Apple.
HARTFORD: Connecticut Chamber of Commerce executives and their health insurance marketing partner the Chamber Insurance Trust announced they are responding to the healthcare cost crisis by overhauling their benefit programs to address the escalating costs to Connecticut businesses.
There are more than 65 Chambers of Commerce in Connecticut serving ten of thousands of members across the state, they operate six existing regional Chamber Benefits Centers across Connecticut.
The Chambers are producing informational events throughout the state and selected members are being designated as Chamber Healthcare Navigators. The Middlesex Chamber is hosting an event on October 11, Danbury October 18 and Norwalk and the Fairfield Coast Chambers on October 19. The New Haven Chamber is organzing a business healthcare summit to be held at Long Wharf Theater later in the month, date to be announced.
The first meeting was held on September 6, at the Manchester Chamber of Commerce, Candice Corcione, Executive Director of the Tolland County Chamber helped organize the multi-chamber event.
Corcione, said, “businesses in our 13 communities are practically shouting from the rooftops, about the increasing healthcare costs. As a Chamber executive my number one responsibility is to help our region’s companies address their problems.
Sometimes we’re advocating for them at the State Capitol or organizing events to help get more business, but the rising costs of healthcare have become a priority.”
Chamber execs cited The Kaiser Family Foundation report that the cost per employee in Connecticut averaged more than $6,545 in 2016, the fifth highest in the Continental US, trailing, only New York, Massachusetts, Rhode Island and New Hampshire.
The Connecticut Department of Insurance has authorized rate increases for 2018 of as much as 31.7% for the individual market. Anthem Blue Cross/ Blue Shield, Connecticut’s largest insurer, was authorized to increase rates that average more than 25%, for the majority of their small business and non-profit market.
Nearly all of Connecticut’s major health insurers have posted double digit rate increases.
To gather more direct information from companies the Chamber executives said they are launching The Connecticut Healthcare Response Survey, to get “extensive business feedback and data from every corner and company segment across Connecticut.”
JoAnn Ryan, president of Connecticut’s Chambers of Commerce Leadership Council, and president of the Northwest Chamber of Commerce, in Torrington said, “from Danbury to Danielson, members are telling Chamber leaders that increasing healthcare costs are strangling their businesses.
We’re hearing that its causing many to forgo investment, reduce or hold back new employment and to seek outsourcing solutions, typically out of state or overseas.”
Ryan added, “the Chambers have used our combined member power, working with our healthcare marketing partner the Chamber Insurance Trust [CIT] of Orange, run by Steve Glick to provide access to quality and affordable health plans for more than two decades.
Steve and Sally Glick owners of the Chamber Insurance Trust have been recognized by Business New Haven as its Innovators of the Year and Small Businesspersons of the Year.
CIT’s CEO Steve Glick said, “most of the media and political attention has been about the Affordable Care Act and the individual market. While we can argue the cause, there is no doubt about what is happening in the marketplace and what the increases mean to Connecticut companies.”
Glick added, “There are policies that the Federal and State governments can do to help, we are not waiting. We’re innovating, we’ve researched, negotiated with providers and are creating new and exclusive solutions offered only through Connecticut’s Chambers.
Glick added, “the idea of managing your healthcare costs, once a year at rate renewal, is over for most companies, especially those with 10-20 employees and Connecticut’s middle market companies. The bottom line solution is long term cost control, transparency, and shared risk with other quality companies.
The only way a middle-market company can contain healthcare costs is by taking control of the expenses, Companies need to pay less for the insurance plan’s administration, marketing and profits, they need to reduce claims through management and wellness, better manage the drug benefit and a have a health plan designed for their unique company.
Aaron Glick, Executive Vice President and in-house Counsel for CIT explained that CIT and the Chambers are focusing on Connecticut’s middle market companies saying, “we all know about Connecticut’s problems with several big headquarters companies, but the state was recently ranked #17 in middle market companies in the country. These firms are the drivers, innovators and sustainable companies, that are the future. Healthcare costs have moved to the top of the list of management issues.”
Disclosure: Second Wind Media Ltd. Publisher of Business New Haven and Conntact.com performs some marketing support functions for the Chamber Insurance Trust.
On August 2nd Jim Wadleigh CEO of Access Health, Connecticut’s ACA [Obamcare] health exchange. Said that concerns that the Trump Administration might withhold certain subsidy payments made to insurers on the exchange could lead both insurers to drop coverage for 2018.
WASHINGTON:– Even though the U.S. Senate failed to repeal the Affordable Care Act, there will potentially be changes to Connecticut’s health care system that may affect tens of thousands of state residents.
Depending on what the president and his administration decide in coming days, some people may lose subsidies that would help pay their premiums, co-pays and deductibles next year. Others could see sizable increases in their premiums and perhaps a smaller choice of plans pending the outcome of decisions yet to be made by Connecticut insurers.
|Access Health CT CEO, James Wadleigh Dropping Retail Locations in New Haven and New Britain|
HARTFORD: Facing a shortened enrollment period, Connecticut’s health insurance exchange announced Wednesday it plans to scale back its two existing storefronts and redeploy resources to broaden its reach.
The decision comes as the exchange, Access Health CT, remains stuck in a rut created by months of uncertainty at the national level. The exchange is anxiously awaiting a critical decision from the White House that will influence whether the individual marketplace’s two insurers will offer plans again next year.
|Connecticare actuary Kelsey, tries to lay out the numbers behind the company's proposed rate increases.|
Hartford: Two of the state’s largest health insurers came face to face with hostile customers and dissenting advocates at a hearing last week over another year of requests for double-digit rate hikes.
The stakes are even higher this year because the state Insurance Department’s final decision on the rate requests will influence whether the two remaining insurers on Connecticut’s health insurance exchange, Access Health CT, return in 2018.
The Insurance Department selected those two insurers, Anthem and ConnectiCare Benefits, for public hearings as part of an ongoing review of the sizable rate hikes they are requesting. The insurers say the increases are necessary to stem financial losses in their individual and small-group plans, both on and off the exchange.
Glastonbury: A leading physician owned multispecialty medical practice Starling Physicians hasexpanded east of the river at 289 Western Boulevard.
The “integrated” practice doctors treat, Allergy, Cardiology, Orthopaedics/Sports Medicine, Physical Therapy, Podiatry, Pulmonary, Rheumatology and surgery
“We are thrilled to be opening a new state-of-the-art facility in Glastonbury,” said Tracy King, Chief Integration Officer of Starling Physicians.“
Hartford: The state’s health insurers are asking for sizeable rate increases for individual and small-business policies sold in 2018, led by Anthem, which is seeking an average 33.8 percent increase on plans covering individuals and their families.
The insurers blamed the size of their rate hikes in large part on the unsteady future of the Affordable Care Act, which congressional Republicans are attempting to repeal.
ConnectiCare has asked the Connecticut Insurance Department for an average rate hike of 15.2 percent on policies it sells through Access Health CT, where it now covers about 51,000 people.
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