WellPoint to acquire Medicaid administrator

Health Care ReformWith potentially an eye on the expanding Medicaid market under the Affordable Care Act (ACA), WellPoint, parent company of Anthem Blue Cross in California, has agreed to purchase Amerigroup a large Medicaid and Medicare managed health administrator.

Medicaid expansion means more government contracts

Under the ACA in 2014, Medicaid will be expanding to cover Americans who earn less than 133% of the poverty level. The federal government will completely fund the expansion for the first three of the state administer program. The expansion of Medicaid has the potential of bringing hundreds of thousand of new health plan members into the Medicaid program.

Is this just the beginning of mergers and acquisitions?

With their impending acquisition of Amerigroup, covering approximately 2.2 million people in 13 states, WellPoint will be in a strategic position to realize millions of new dollars in health insurance revenue funded by the federal government. Wellpoint’s latest acquisition comes shortly after they acquired 1-800-Contacts last June. All of this is further evidence that the ACA is prompting large health insurance companies to position themselves to make the most of healthcare reform from either the private market or through government contracts.

Click Read the full press release WellPoint Announces Definitive Agreement to Acquire Amerigroup

  • Bill Schlack

    It reduces cost in the short run and reduces the number of players and ability of new ones to enter the market in the long run, institutionalizing cost. The model is far fewer players with much greater vertical integration so they become critical in the final design no matter what it looks like. It squeezes out administrative savings in the short run but is no better at delivering service than a government bureaucracy in the long run. This is the kind of solution that big government is most comfortable managing.