The Health Net Insurance Company Merges with Centene
Posted: July 12, 2016
by John Hansen
The Centene-Health Net Merger is the first of three major health care mergers in California to occur this year. The Aetna-Humana and Anthem-Cigna mergers are still facing regulatory review.
Health Net Insurance Co Stockholders
Centene purchased the Health Net Insurance Company and stock shares were divided. According to Fierce Health Payer, “Health Net shareholders received 0.622 shares of Centene common stock and $28.25 in cash for each share at closing, making the total transaction value about $6 billion, including the assumption of debt, according to the announcement.” Also, Health Net Insurance Plan’s CEO (Jay Gellert) and CFO (James Woys) remained on as advisers to Centene’s CEO, Michael Neidorf.
Department of Insurance Concerns about the Merger
Dave Jones, California Commissioner from the Department of Insurance, in a speech on May 17, assured Californians that he was keeping a close eye on these mergers.
Jones was concerned because the research suggests that mergers, like that of Centene and the Health Net Insurance Company, usually do not end up being in the best interest of consumers. Premiums tend to rise and benefits tend to decrease as health plans merge and reduce the amount of competition in the market.
Centene Adds a Commercial Piece and a Government Health Insurance Product in California
Centene is primarily a Medicare/Medicaid/Medi-Cal company. It bought the Health Net Insurance Company in an effort to expand its California market. Centene plans to keep the Health Net name and branding. The Health Net Insurance Plan had a commercial medical insurance piece that Centene did not, so that was attractive.
Adding the Health Net Insurance Company increases Centene’s presence in the Obamacare marketplaces. Health Net Covered California gives Centene another government health insurance product to add to their Medicare Advantage coverage and their contracts with the Veterans Administration and the Department of Defense.
According to Annette M. Boyle of Fierce Health Payer, the integrated company of Centene and the Health Net Insurance Plan “now insures more than 10 million members.”