Health insurer Aetna Inc. has made a deal to buy Louisville-based competitor Humana Inc. in a $37 billion deal the companies say would create the second-largest managed care company.
Adding Humana's large business in Medicare Advantage, the federal health care program for seniors, would make Humana the nation's largest Medicare Advantage provider.
Hartford, Conn.-based Aetna says it will retain Humana's Louisville headquarters as the base for its Medicare, Medicaid and military Tricare businesses.
David Dubofsky is a finance professor at the University of Louisville. He says the deal was inevitable.
“In order to be competitive these companies are being forced to get bigger, they have to realize cost saving, the cost savings unfortunately come at the cost of the employees and ten they have to have more market power to be able to reduce their costs which are the payments they make to doctors," Dubofsky noted.
Dubofsky says he expects the deal to bring higher rates and lead to a reduction in local jobs because of duplication.
Humana is Louisville’s largest publicly-traded company, with a workforce of more than 12,000.