US insurer WellPoint is to acquire managed care provider
Amerigroup for approximately $4.9bn.

The acquisition is expected to close in Q1
2013 and is subject to certain state regulatory approvals and
standard closing conditions and customary approvals.

Wellpoint said the acquisition will boost the companies’
capabilities to more effectively and efficiently serve the US’s
growing Medicaid population.  Medicaid is a national health
care programme in the US, which helps pay for medical services for
low-income people.

The development comes at a time when the US health insurance
sector is set for major reform. This is because the US Supreme
Court’s recent decision to uphold the Affordable Care Act (ACA)
means that from 2014 the 30 million Americans who do not yet have
health insurance, will have access to “affordable” private health
insurance plans, according to President Obama.

Following the court decision, President
Obama’s administration said it would step up its work with States
to implement Affordable Insurance Exchanges. 

Managed care

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According to Wellpoint, US states are increasingly looking
increasingly looking to managed care as a solution to more
effectively operate their Medicaid programmes because of its value
proposition.

Wayne S. DeVeydt, WellPoint’s executive vice president and chief
financial officer, said: “The acquisition of Amerigroup expands our scale and further
diversifies our business mix by deepening our investment in the
high growth Medicaid marketplace. It also increases
our flexibility to serve customers across the economic
spectrum.”

DeVeydt added: “We believe the acquisition is not only
strategically important, significantly enhancing our future revenue
and EPS growth opportunities, but will also provide an attractive
return for our shareholders.”

After the acquisition is completed, WellPoint will have a
presence in 13 US states.  

For the year ended 2011, WellPoint delivered net income of
$2.6bn, compared to $2.9bn in 2010 and $4.7bn in 2009.