Fast-growing health insurer Centene is considering a purchase of rival WellCare Health Plans, according to media reports.
The stock of WellCare jumped in after-hours trading following reports by Bloomberg News and CNBC. Shares of WellCare soared 14% in after-hours trading on the New York Stock Exchange following a day when health insurance stocks fell earlier on news the Trump administration wants federal courts to strike down the entire Affordable Care Act.
Neither executives at Centene nor WellCare could be reached Tuesday evening for comment.
Both health insurance companies have been growing, particular in the business of government subsidized health benefits but are still much smaller than UnitedHealth Group, Cigna and Anthem.
Centene’s U.S. business under CEO Michael Neidorff has grown rapidly thanks to the ACA and its subsidized individual coverage known as Obamacare as well as the expansion of Medicaid benefits for poor Americans. Centene now manages Medicaid benefits for more than 8 million for states and offers individual coverage on the ACA’s public exchanges in 20 states.
Centene has nearly 2 million Obamacare customers and 20% marketshare after entering four new states for 2019 and expanding in six existing ACA markets where it has already been selling individual coverage, including markets Anthem, Aetna and UnitedHealth Group departed.
WellCare, meanwhile, has been growing as well but is still considered largely a regional player under CEO Ken Burdick even after it acquisition last year of Meridian Health Plans of Illinois and Michigan and the MeridianRx pharmacy benefit manager. The Meridian deal gave WellCare a big boost in managing Medicaid benefits, which have expanded under the ACA.
But both Centene and WellCare have been increasingly getting into the potentially lucrative Medicare Advantage business, which sells private health coverage to seniors via contracts with the federal government.
The Trump administration has followed the Obama administration's lead by changing rules to allow Medicare Advantage plans to cover more supplemental health benefits. Such rule changes are expected to result in millions more seniors choosing Medicare Advantage plans over traditional Medicare.
To read the original article, click here.