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NEWS RELEASE
Jun 23, 2004


CONTACT: Jerry Flanagan, (415) 633-1320

Schwarzenegger Administration Folds to Public Pressure, Schedules Hearing Still Refuses to Release Details of Wellpoint/Anthem Merger

The Schwarzenegger Administration announced today plans to hold a public hearing on the pending merger between Blue Cross of California parent company, WellPoint Health Networks, and Anthem Inc. after refusing to do so for seven months, according to the Foundation for Taxpayer and Consumer Rights (FTCR) which first requested a hearing in November of 2003 when the merger was announced.

However, the Schwarzenegger Administration has repeatedly refused to release documents providing details of the proposed merger, including communications between Administration officials and the CEOs of the merging companies.

WellPoint and Anthem have been widely criticized after FTCR released documents attained under a Public Records Act request showing that executives are slated to receive up to $600 million in cash and stock if the merger is approved. The compensation documents are now publicly available at: http://www.consumerwatchdog.org/healthcare/rp/rp004344.pdf

As of Monday, details of the merger proposed by Anthem in negotiations with the California Department of Insurance would allow the company to remove $650 million of Blue Cross of California's $1 billion in premium-funded reserves from the state. Insurance Commissioner John Garamendi, who will hold his own public hearing on Friday in Los Angeles, has raised concern over the fate of Blue Cross' reserve funds in recent weeks.

"Governor Schwarzenegger has finally capitulated to the patients and shareholders who have demanded a public forum to evaluate the impact of the proposed merger," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights (FTCR). "This must be the beginning, not the end of the Governor's involvement. The Governor must schedule public meetings throughout the state so that all patients can participate. Schwarzenegger must also demand that the $600 million in executive payouts are reduced and that Blue Cross of California's $1 billion in reserves are kept in the state."

This week FTCR received a letter from the Schwarzenegger Administration saying that the group's most recent Public Records Act request for a record of all communications between named Administration officials and the two merging companies would not be released until after the hearing, if at all.

"What is the Governor hiding? A hearing without full disclosure of the details of the merger means we won't have much to talk about," said Flanagan. "What happened to Governor's commitment to an open government?"

The Schwarzenegger Administration's Department of Managed Health Care still refuses to release over 500 pages of documents pertaining to the merger.

Governor Schwarzenegger has received $92,400 in campaign contributions to his various fundraising committees from WellPoint and its executives.

Consumer advocates and health care providers have denounced the pending merger because when company executives are handed hundreds of millions of dollars, patients get short changed because there is less money available for hands on care. The terms of the merger also allow the merged company great latitude to drop individuals and employers from coverage and even refuse to treat low-income and disabled patients.

The public hearing has been scheduled for July 9th in Sacramento.

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