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CVS-Aetna combo a win for Medicare, Medicaid users

Leia Klingel
FILE - In this Oct. 21, 2016 file photo, a CVS drugstore and pharmacy in Philadelphia. Three years after a wait-time scandal, the Veterans Affairs Department is hoping a private-sector partnership with the CVS Pharmacy chain will reduce some of its strain in providing timely urgent care. The new initiative announced Tuesday, April 18, 2017, is a pilot program that allows ailing veterans who receive treatment at the Phoenix VA medical center to access one of 24 "MinuteClinics" operated by CVS for treatment of minor illnesses and injuries, such as respiratory infections or to order lab tests. (AP Photo/Matt Rourke, File)

CVS (NYSE:CVS) and Aetna (NYSE:AET) will merge into one company, and the coming synergies as the companies integrate could provide big benefits to Medicaid and Medicare users.

During the press conference discussing the merger, company executives said the combined company would “help consumers navigate the Medicare and Medicaid confusion.”

While at the same time, Medicare and Medicaid will provide an opportunity for the combined company, CVS CEO Larry Merlo noted that “the real opportunity is in government businesses: Medicare and Medicaid,” noting, that as a combined company, they will be able to better coordinate care and eliminate waste and unnecessary spending, which will mean lower costs and better care, improving these plans for customers.

Critics of both Medicare and Medicaid say the plans offer a limited choice of doctors for patients, pricing problems and gaps in coverage.

CVS will purchase Aetna with a combination of both outstanding shares and stock. The transaction values Aetna at approximately $207 per share or approximately $69 billion. Including Aetna’s debt, the total value of the transaction is $77 billion.

In their press release discussing the deal, CVS said “This transaction fills an unmet need in the current health care system and presents a unique opportunity to redefine access to high-quality care in lower cost, local settings—whether in the community, at home, or through digital tools.”

The company expects the transaction to close in the second half of 2018, pending regulatory approval.

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