According to a recent report by the Wall Street Journal, Walmart is in the early stages of talks to buy health insurer Humana. If the deal goes through, it would be the latest in a series of mergers in the healthcare industry in recent months.1 The two large companies are looking at a variety of options, including an acquisition.

“Shares in Humana, which has a market value of more than $37 billion, leaped about 11% in after-hours trading following the report. Shares in Walmart, whose market value tops $263 billion, declined around 1%.”2

Many of the nation’s largest health insurers have been looking for other options since federal judges and the U.S. Department of Justice put a stop to Humana’s attempted merger with Aetna and Anthem’s planned acquisition of Cigna, in 2017 (there were antitrust concerns, and rightly so).3 The current plans are for CVS to buy Aetna and for Cigna to purchase Express Scripts, a pharmacy benefits manager.

But why all the frenzied coupling?

There’s fear that Amazon, one of Walmart’s biggest rivals, will “upend the industry.” And indeed they have already made “inroads into the sector, announcing in January that would seek ways to address soaring health care costs for its own employees, rolling out a line of private label over-the-counter medicines and building a business selling medical supplies to doctors, dentists and hospitals.”4

However, Larry Levitt, the senior vice president at the Kaiser Family Foundation, a healthcare research center thinks it’s actually Amazon that should be concerned about Walmart:

“Walmart has a better chance to disrupt health care than Amazon. People still get their health care in person and there are Walmarts all over the place.”5

And, let’s not forget that Walmart employes almost 1.5 million people in the U.S. alone. But that’s enough of a reason for the grocery giant to own a health insurer; it could help lower its costs significantly.

Presently, Walmart runs a large pharmacy business with outlets in many of its stores. As long as people still prefer to see their doctor in person and speak to a pharmacist about drugs and supplements, fears about Amazon might be premature or unfounded.

Sources and References

  1. WTVR CBS 6, March 29, 2018.
  2. WTVR CBS 6, March 29, 2018.
  3. WTVR CBS 6, March 29, 2018.
  4. WTVR CBS 6, March 29, 2018.
  5. WTVR CBS 6, March 29, 2018.