Additional Hearings Likely To Delay, Not Kill Anthem-WellPoint Merger
Issues raised in a five-hour legislative hearing Wednesday before a joint Assembly and Senate committee "may stall, but will not likely kill" a proposed $15.5 billion merger between Indiana-based Anthem and California-based WellPoint Health Networks, according to some analysts, Reuters/Orange Country Register reports (Dixon, Reuters/Orange County Register, 6/11). The merger, announced last October, would combine the companies under the name WellPoint and have headquarters in Indianapolis. The company would have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states. WellPoint currently provides health insurance for seven million California residents through subsidiary Blue Cross of California.
Assembly Speaker Fabian Nunez (D-Los Angeles) last month formed a special committee to investigate the proposed merger in response to concerns raised by several lawmakers and consumer advocacy groups that the Department of Managed Health Care would approve the agreement without a public hearing. Although the state has held public hearings on similar mergers in the past, state law does not require such a hearing. The proposed merger requires approval from Anthem and WellPoint shareholders, as well as from regulators in the states where the combined company would operate. Ten affected states, as well as the federal government, have approved the proposed merger. Although Insurance Commissioner John Garamendi (D) does not have the authority to block the proposed merger, he could deny a request by Anthem to purchase Blue Cross of California, a move that could make the deal more difficult (California Healthline, 6/10). According to Reuters/Register, some experts have said the merger "would pass regulatory muster" despite state opposition because there is not a significant overlap in the companies' geographic customer markets. However, some analysts say state officials could place limits on how sharply the combined company could raise premiums for individuals and small businesses. David Shove, an analyst for Prudential, said, "We think the California regulators will try to use the state Assembly hearings as political leverage over Anthem and WellPoint to extract concessions."
According to Reuters/Register, some critics hope that DMHC and the Department of Insurance will hold additional hearings, "which surely would delay approval" of the merger because of a shareholder vote on the deal scheduled for June 28 (Reuters/Orange County Register, 6/11). DMHC Senior Counsel Kevin Donohue on Thursday said agency officials likely would decide next week whether to hold a public hearing on the merger, the Indianapolis Star reports. "If there's value to be added in another public hearing" it will be held, Donohue said. Garamendi also said he also would decide "soon" whether to schedule a hearing (Swiatek, Indianapolis Star, 6/11).
Jerry Flanagan, a spokesperson for the Foundation for Taxpayer & Consumer Rights, said, "The merger should be delayed until these questions are answered." He added, "It's becoming unlikely this will be worked out by the 28th" (Reuters/Orange County Register, 6/11). Spokespeople for both Anthem and WellPoint said the stockholder votes will take place June 28 regardless of whether California regulators have approved the merger, according to the Star (Indianapolis Star, 6/11). KPBS' "KPBS News" on Friday reported on the merger. The segment includes comments from FTCR President Jamie Court (Goldberg, "KPBS News," KPBS, 6/11). The complete transcript is available online. The complete segment is available online in RealPlayer.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.