Aetna Life and Casualty Co. is buying U.S. Healthcare Inc. in an $8.9 billion deal that will create the nation’s biggest provider of health benefits, reaching one in every 12 Americans.
Combined, the companies’ medical plans cover 23 million people nationwide receiving life, health and disability insurance; prescriptions; mental health services, and vision and dental care. Of that number, 14 million get full-scale medical coverage.
Analysts said the deal announced Monday represents a clear illustration that traditional health insurance is in irreversible decline, to be replaced by HMOs and other forms of managed health care, where U.S. Healthcare is a leader.
Although the combined company will retain the Aetna name, it will be managed more like U.S. Healthcare, which is far more profitable. Hartford-based Aetna has been searching for a health care merger partner for six months, planning to shed less profitable insurance lines.
Within days it is expected to complete the $4 billion sale of its property-casualty insurance unit.
“This merger is a major step in our strategic plan to create an outstanding national health care company,” said Aetna chairman Ronald E. Compton, who will be chairman of the merged company. “It is an excellent strategic fit, and establishes a strong platform for growth.”
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