There's talk of mergers vibrating through the health insurance industry.
Rumblings of consolidation have been coming to the surface lately, as Cigna rebuffed advances by Anthem over the weekend. Cigna and Aetna, two of the five largest insurers in the country, have expressed interest lately in acquiring Humana, according to news reports.
There's a very good reason Humana is appealing to so many suitors: Unlike the other top health insurance companies, Humana receives the bulk of its revenue from Medicare, some 73 percent in 2014, according to figures from Stifel. The number of U.S. citizens over 65 is expected to grow by 60 percent through 2030, to 74 million, compared with 12 percent growth overall, according to the Census. As more baby boomers reach 65, a solid presence in the Medicare marketplace will be more and more valuable.
In April, the Centers for Medicare and Medicaid Services announced that for the first time in years, the government will increase Medicare Advantage rates, by around 1.25 percent. Medicare Advantage is the program through which private insurers administer Medicare funding.