HCSC Announces $3.3B Cigna Medicare Business Acquisition

HCSC, an independent licensee of the Blue Cross Blue Shield Association, intends to seal the acquisition of Cigna’s Medicare businesses for $3.3 billion, the payer announced.

The purchase includes the major payer’s Medicare Advantage plans, Medicare Supplemental Benefits plans, Medicare Part D plans, and CareAllies—which is a combination of Cigna assets that supports providers in value-based contracts.

HCSC leadership saw this acquisition as an opportunity to enlarge its Medicare footprint.

“This acquisition accelerates our growth in an important market segment,” explained Opella Ernest, MD, president of HCSC Markets. “The way we do business is as important to us as what we do. We have a culture of compassion and focus on data-driven insights to help members achieve healthier outcomes. We are excited to have Cigna’s Medicare and CareAllies teams bring their proven talent and expertise to HCSC.”

If the acquisition is successful, HCSC will significantly expand its Medicare membership. The payer already has 1 million Medicare beneficiaries. Cigna’s businesses will bring in 3.6 million Medicare beneficiaries, 600,000 Medicare Advantage plan members, over 450,000 Medicare Supplemental plan members, and 2.5 million members in Medicare Part D.

For Cigna, the deal may allow the payer to invest more of its revenue elsewhere.

“The agreement will enable Cigna to drive meaningful value for all our stakeholders, providing an enhanced ability to accelerate investment and growth in our services platform, while further deepening our commitment to our existing health benefits platform,” shared David M. Cordani, chairman and chief executive officer of The Cigna Group.

Apart from its Medicare business, HCSC also offers plans for large and small employers and Medicaid. Overall, HCSC serves over 22 million people across four states—Illinois, Montana, New Mexico, Oklahoma, and Texas. The payer also provides pharmacy solutions, life and dental insurance, and access to health technology.

The parties involved expected that the deal would close in early 2025. However, first, the deal has to survive regulatory approvals and other conditions.

This announcement comes on the heels of a failed Cigna-Humana merger. Dealmaking among major payers has been highly scrutinized in the last several years. Rumors of merger talks between Cigna and Humana circulated in November 2023. But, in less than two weeks, the payers abandoned this course. Major news outlets reported that the companies could not agree on pricing.

Deals between big payers present both benefits and drawbacks for the rest of the healthcare community.