Staff File Photo
The Cigna building is in downtown Chattanooga across from Warehouse Row.Cigna Corp. will buy fellow health insurer HealthSpring Inc. in a $3.8 billion deal as it becomes the latest managed-care company to snap up a bigger share of the fast-growing Medicare Advantage market.
Cigna, which employs more than 1,300 workers at its two Chattanooga claims processing facillities, also said Monday it raised its earnings expectations for 2011.
Cigna’s acquisition is the latest in a series of deals made by health insurers to expand their Medicare Advantage businesses, which are growing at a faster rate than commercial insurance as baby boomers become eligible for them. In addition, big insurers like Cigna have reported strong results in recent quarters, and analysts have speculated that companies would start exploring acquisitions.
Medicare Advantage plans are privately run versions of the government’s Medicare program for people aged 65 and older and the disabled. They are subsidized by the government and offer basic Medicare coverage topped with extras or premiums lower than standard Medicare rates.
Earlier this year, WellPoint Inc. said it would acquire Medicare Advantage plan provider CareMore Health Group, and WellPoint officials noted that more than 1 million baby boomers will become eligible for Medicare every year until 2030 across the insurer’s states.