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Read Making a Killing

home / healthcare / in the media

American Health Line
May 19, 2004

by State & Local Wires

ANTHEM/WELLPOINT: CALIF. MAY OK MERGER WITHOUT PUBLIC HEARING

Officials from the administration of California Gov. Arnold Schwarzenegger (R) may approve a proposed merger between Indiana-based Anthem and California-based WellPoint Health Networks without a public hearing, a possibility that has raised concerns from consumer advocacy groups, the Los Angeles Times reports (Salladay/Nicholas, Los Angeles Times, 5/19).

Under the proposed merger, announced last October, the combined company, which would use the name WellPoint and have a headquarters in Indianapolis, would have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states (American Health Line, 3/10).

In California, WellPoint provides health insurance for seven million state residents through subsidiary Blue Cross of California. State law does not require a public hearing on the proposed merger, but state Insurance Commissioner John Garamendi (D) said that he supports a joint hearing conducted by the state Department of Insurance and the state Department of Managed Health Care. The state has held public hearings on similar mergers in the past, but state DMHC officials said the proposed merger between Anthem and WellPoint is different because "there would be no curtailing of consumer choice or competition" because Blue Cross of California would continue to operate. State DMHC officials said that the department will make a decision about the impact of the proposed merger on state residents in the near future.

REACTION

California Medical Association CEO Dr. Jack Lewin said, "Not having the public hearing is not a good sign. Anthem should ... get in and listen to people and be ready to start a new approach." Jamie Court of the Foundation for Taxpayer and Consumer Rights said, "Anthem and WellPoint executives have to assure the public that the promises made to Blue Cross customers will be kept." Court also said that a public hearing is important because of the "financial relationship" Schwarzenegger has with WellPoint. According to the Times, financial disclosure forms indicate that Schwarzenegger has invested more than $1 million in Dimensional Fund Advisors, a fund management company that lists WellPoint as a client. In addition, secretary of state records indicate that Blue Cross of California contributed a total of $71,000 to the Schwarzenegger campaign fund and a March ballot measure campaign supported by the governor; WellPoint contributed $21,200 to the governor's campaign last year, the Times reports. A WellPoint spokesperson said that the company would not oppose a public hearing on the proposed merger with Anthem (Los Angeles Times, 5/19).

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