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Read Making a Killing

home / healthcare / in the media

Milwaukee Journal Sentinel (Wisconsin)
Jan 28, 2005

by Editorial

Missing out on a windfall

Wisconsin missed the boat.

In the midst of yet another budget deficit, the Doyle administration had a chance to obtain perhaps tens of millions of dollars by negotiating a concession package before approving the merger of two giant health insurance firms last year. Instead, it let that opportunity pass because state officials believed they didn't have authority to wring concessions from the two companies in return for the state approving the merger into what is now the largest health insurer in the nation.

California and Georgia took a different stance. They seized the opportunity to win concessions in return for their approval of the merger of Wellpoint Health Networks Inc. and Anthem Inc. into Wellpoint Inc. Consequently, California will get $265 million and Georgia more than $126 million to address their respective health care concerns.

Their insurance commissioners argued that the new firm would harm consumers by reducing competition and by sticking ratepayers in both states with $4 billion in merger costs and up to $600 million for lucrative executive bonuses through higher premiums.

In an interview with Journal Sentinel reporter Steve Schultze, Wisconsin Insurance Commissioner Jorge Gomez said he lacked the authority under state law to demand the concessions that California and Georgia got. Richard Sweet, an attorney with the state's non-partisan Legislative Council, agreed. Sweet said Wisconsin law probably doesn't give the insurance commissioner sufficient authority to withhold approval of a merger based on broad grounds that it might harm the public.

A spokeswoman for Gov. Jim Doyle, who appointed Gomez to the commissioner post in 2003, said the governor also did not believe the state had the authority to obtain concessions.

But some consumer advocates disagree. They say Wisconsin's law does provide authority to hold up mergers based on the likelihood that the burdensome costs of mergers such as these could be passed on to ratepayers. Indeed, since the merger approval, Wellpoint has announced rate increases in Wisconsin of 9% to 20% on four of its health programs.

Wisconsin wasn't the only state that missed the boat. So did nine other states and Puerto Rico. We're assuming officials in those places would also argue they didn't have the authority to get any concessions.

But Jerry Flanagan, health care advocate for the Santa Monica, Calif.-based Foundation for Taxpayer and Consumer Rights, had a simpler explanation.

"You can't get what you don't ask for," Flanagan told Schultze. "The reason California got concessions and Wisconsin didn't was the elected commissioner in California demanded it."

Granted, maybe Flanagan was being a tad simplistic. But, then again, you'll never know if you don't at least try.

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