Dive Brief:

• The New York Times reports that one of the biggest group health insurers in the country, Anthem, made an offer to acquire competitor Cigna for more than $47 billion in cash and stock. Anthem and Cigna provide a large share of coverage to employer-paid healthcare plans.
• Cigna imediately rejected the offer in a strongly worded letter.
• The Anthem move is the latest step toward an expected consolidation among health insurance companies, according to the Times article. Driving the consolidation push has been the Affordable Care Act, which has bolstered revenues. At the same time, says the Times, profit margins have come under pressure in the face of greater pricing transparency and less generous funding of government plans.
• Update: Today, Anthem raised the stakes by upping the cash-and-stock offer to $54 billion, according to severa news outlets.

Dive Insight:

The Times explains that growth from the traditional market of providing health coverage to employees has stalled, as fewer companies provide insurance coverage to employees. As a result, the insurers have steadily moved into the heavily regulated government markets of Medicare and Medicaid, as well as the individual market under the Affordable Care Act.

Anthem operates well-known Blue Cross plans in 14 states and has a strong presence in offering Medicaid plans for low-income individuals. Cigna is best known for offering plans through employers and selling other kinds of insurance like dental and disability.

Considering employer-provided healthcare plans come from group insurers like Cigna and Anthem, this could be a good thing for employers, as efficiencies created by these mega-mergers may lead to lower costs in the form of insurance premiums.