UnitedHealthcare and Health Net, Inc announced that UnitedHealthcare has completed its previously announced acquisition of Health Net of the Northeast’s licensed subsidiaries and has obtained rights to continue providing service under the HealthNet’s brand in Connecticut, New York and New Jersey.
The acquisition gives United another solid foothold into the managed care market. The deal closed just ahead of planned Congressional health care reforms that are widely expected to make managed care plans more attractive to consumers than traditional PPOs. United already manages more than one half of all FORTUNE 500 corporate benefits plans and provides health benefits to about 25 million people under its GoldenRule / UnitedOne brands, according to published reports.
HealthNet and its subsidiaries provide health benefits to approximately 6.6 million individuals through group, individual, Medicare, Medicaid and TRICARE and Veterans Affairs programs. Health Net’s behavioral health subsidiary provides mental health benefits to approximately 6.5 million individuals in the United States.
As part of the HealthNet buy-out, United has also asked regulators in New Jersey for permission to obtain the rights to HealthNet’s Medicaid business. Regardless of the state’s decision, United said it would not assume servicing of any HealthNet policies until they are due for renewal.
The U.S. Congress is expected to pass affordable healthcare legislation in 2010 that will, among other changes, provide subsidies to low-income Americans who cannot obtain health insurance. The subsidy program was applauded on Wall Street, where traders focused heavily on healthcare-related stocks to drive its accumulated value more than 10 percent above average trading in December. Industry watchers believe the subsidies will bring more individuals into the private health insurance market, thus increasing revenues for the major insurers.
When announcing the deal, United CEO Jeff Alter said his company is well prepared to handle the infusion of new customers in spite of uncertain business projections that the pending healthcare reform bill will create.
“UnitedHealthcare has a long, successful history of providing people in the Northeast with affordable, quality health care options,” said Alter in a prepared statement. “We look forward to serving the health and well-being needs of Health Net’s Northeast members as they renew with UnitedHealthcare,”
BullMarket, a leading stock analysis service covering the insurance sector, believes that United, Aetna and other large individual insurance and employee benefits providers will continue to consolidate and acquire new lines of business in the first few months of 2010 as a strategic move against possible reforms.
“Considerable uncertainty, nonetheless, will remain over healthcare stocks until the differences between the House and Senate versions (of the health insurance reform bill) are resolved sometime next year, with the main obstacle being the ‘public option’ that is in the House version but not the Senate’s.”
