Anthem, WellPoint Shareholders Approve Acquisition
Anthem and WellPoint Health Networks shareholders on Monday in simultaneous meetings in Indianapolis and California voted to approve a merger between the two health insurers, the Indianapolis Star reports (Swiatek, Indianapolis Star, 6/29). The merger, announced last October, would combine the companies under the name WellPoint and create headquarters in Indianapolis. The combined company would have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states, including California. The Department of Managed Health Care must approve the merger. Insurance Commissioner John Garamendi (D) cannot block the merger in its entirety, but he has the ability to deny Anthem's acquisition of the license for WellPoint subsidiary Blue Cross of California (California Healthline, 6/15). The subsidiary is the largest part of WellPoint's California businesses. The 10 other states with direct regulatory authority and the federal government have approved the proposal (California Healthline, 6/24). About 97% of shareholders voted in favor of the merger, according to the Star (Indianapolis Star, 6/29). Under the agreement, WellPoint shareholders would receive one share of Anthem stock and $23.80 in cash for each WellPoint share (AP/Columbia State, 6/28). Anthem shareholders voted to issue 158 million new shares to acquire WellPoint and approved the company's name change. According to the Star, the shareholders' meetings were "surprisingly discussion-free," lasted for 15 minutes, and no shareholder in either of the meetings spoke during the discussion periods (Indianapolis Star, 6/29).
Anthem President, CEO and Chair Larry Glasscock said the acquisition "brings together unprecedented resources to drive innovation in health benefits and improve the health of our members." He added, "It also will produce significant cost savings and will better position us to keep health care affordable for millions of members" (Girion, Los Angeles Times, 6/29). Glasscock said the shareholders' vote indicated "overwhelming support" for the merger. He added that Anthem would not put in place an integration plan for the two firms' operations until after two California regulatory agencies have approved the deal (Indianapolis Star, 6/29). Treasurer Phil Angelides (D) said, "We will continue to oppose this merger, calling on Gov. [Arnold] Schwarzenegger [R] and his Department of Managed Health Care to condition its approval of any WellPoint-Anthem merger on the elimination of the excessive executive compensation package" (Los Angeles Times, 6/29). DMHC has scheduled a public hearing on the merger for July 9, but some analysts expect a decision to come two to four weeks later, the Star reports (Indianapolis Star, 6/29).
Garamendi has said he will not sign off on the merger unless both companies agree to invest in health coverage for low-income children in California (Los Angeles Times, 6/29). According to the Star, California legislative staff on Tuesday will be briefed on such a proposal. WellPoint spokesperson Ken Ferber said, "It's an investment, not a donation that we're looking at." He added, "We're going to be discussing that with the commissioner's office." Saeed Ali, chief of staff for Assembly member Manny Diaz (D-San Jose), said, "We'll see what we want to do. We're going to be pursuing that." Meanwhile, representatives from the Foundation for Taxpayer and Consumer Rights on Monday called on California insurance regulators to require Anthem to refund $1 billion to policyholders if the merger is approved. According to the Star, FTCR says the amount represents the reserves that WellPoint's Blue Cross unit has set aside from premium income (Indianapolis Star, 6/29).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.