Cigna Corporation (CI: NYE) is considering selling its medicare advantage business. This strategic decision could have far-reaching implications for the company, particularly in its pursuit of a potential merger with Humana, another major health insurance player.

Humana’s Shift in Focus:

Humana (HUM: NYE) has made it clear that it intends to exit the commercial health insurance business. This move signals a significant shift in focus towards the medicare advantage segment, where Humana holds a dominant position with over 5 million enrollees.

Cigna, on the other hand, has a relatively smaller presence in the Medicare Advantage market, with fewer than 600,000 enrollees. However, the company has consistently emphasized its commitment to Medicare as a key area for growth.

Addressing Antitrust Concerns:

The potential sale of Cigna’s medicare advantage business could be a strategic move to address antitrust concerns that might arise from a merger with Humana. By shedding its medicare advantage operations, Cigna could potentially smooth the way for regulatory approval and increase the likelihood of a successful merger.

A merger between Cigna and Humana would create a healthcare powerhouse, combining Cigna’s strengths in pharmacy benefits management with Humana’s expertise in medicare advantage. This combined entity would have a substantial footprint in both the commercial and medicare advantage markets, offering a comprehensive range of products and services to its vast customer base.

A Landmark Deal in the Making:

The healthcare industry is undergoing a period of rapid transformation, and mergers and acquisitions are playing a significant role in shaping the competitive landscape. A potential Cigna-Humana merger, if approved, would be a landmark deal that would reshape the industry and redefine the healthcare landscape for years to come.

Industry analysts believe that a Cigna-Humana merger could face intense scrutiny from antitrust regulators. However, the potential sale of Cigna’s medicare advantage business could be a strategic move to appease regulators and facilitate the merger.