CVS to Buy Universal American's Medicare Unit for $1.25 Billion

Recent reports have been released concerning the new emerging class in the United States, Baby Boomers. As of January 1, 2011, Baby Boomers will turn 65. This age is more critical than ever because these Baby Boomers are now eligible to receive Medicare benefits. Currently 46 million Americans receive Medicare to the tune of $500 billion annually. With additional recipients begin the fears of coverage failures or simply running out of funding. Close to 80 million Baby Boomers will be eligible for benefits within the coming 20 years.

With an increase in the amount of Americans needing Medicare coverage, businesses can capitalize now and reap the benefits. CVS Caremark (CVS) has positioned itself for a profitable future by purchasing the Medicare Part D business Universal American for approximately $1.5 billion. This partnership will instant serve over three million Medicare Part D members, 1.9 million served by Universal American and 1.2 served by CVS.

As the second largest pharmacy chain behind Walgreens, CVS has found a way to capitalize on the emerging Medicare market and reward shareholders.

CVS is not the only retail pharmacy business seeking to capitalize on the emerging class of Baby Boomers. Walmart announced a partnership with Humana Inc. to provide millions of Americans with low cost options to their current healthcare costs. The Humana Walmart-Preferred Rx Plan provides millions of Americans with rates as low as $14.80 per month while saving participants close to $450 per year.

President of Caremark Pharmacy Services, Per Lofberg, pointed to a potential shift in the mindset of Americans seeking healthcare coverage. He looks for Americans to lean toward Medicare instead of traditional employer based healthcare options. This shift is aligned with new healthcare laws enacted in the United States.

Now the real battle begins. With close to 50 million Americans eligible for Medicare, retailers are going to battle for the foot traffic to please not only the participants of Medicare, but the customers looking for low cost healthcare options.