CALIFORNIA: JUDGE BLOCKS CARE CUTOFF; MERGER PROBE WIDENED
A San Francisco Superior Court judge issued a temporaryThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
injunction yesterday barring Gov. Pete Wilson (R) from
implementing his plan to cut off prenatal care benefits to
illegal immigrants (Rojas, SAN FRANCISCO CHRONICLE, 11/27).
Wilson had declared a state emergency and planned immediate
implementation of the new federal welfare reform law (see AHL
10/15). New applicants would have been denied benefits beginning
December 1, and current beneficiaries would have been denied
benefits beginning January 1, 1997. However, the judge ruled
that the state has failed to show that an emergency exists, LOS
ANGELES TIMES reports (Dolan, 11/27). Judge William Cahill ruled
that "the mere enactment of a federal law does not create an
emergency here in California." Wilson said, "The decision is
totally erroneous, takes California out of compliance with
federal law, will cost California taxpayers approximately $25 to
$30 million and will be appealed" (CHRONICLE, 11/27).
IMPACT: Without the emergency measure, the state must now
move to end the prenatal benefits under the "normal regulatory
process, which requires public comment." State officials said
that "could take as little as 120 days," but a Wilson
spokesperson said that "regulations will not be ready for another
five to seven months." The delay will afford "opponents ... time
to help shape the new regulations, mount a challenge of the
federal law and lobby the state Legislature to pass a new law to
save the program," TIMES reports (11/27).
MERGER MANIA: The FTC has "widened its antitrust
investigation" of PacifiCare Health System Inc.'s planned merger
with FHP International Corp. The commission subpoened "more than
a dozen California health plans and medical groups for data about
their markets." WALL STREET JOURNAL reports that the expanded
investigation "raises questions about whether the transaction can
be completed by the companies' January target date." The records
requested by the FTC focus on information about Medicare HMOs in
California's 11 most populous counties, indicating that "the FTC
may be concerned about the anticompetitive effect of market
concentration." PacifiCare and FHP are the two "largest
operators of Medicare HMOs" in the country, with nearly one
million of the four million Medicare beneficiaries currently
enrolled in HMOs.
THE SUBPOENA: JOURNAL reports that the subpoena asked for
information about "the deal's impact on other Medicare HMOs'
'ability or likelihood ... of entering into any relevant
market.'" PacifiCare officials said the company is "in the
process of complying" with the agency's requests, and could not
predict when the submission might be finished. JOURNAL notes
that investors and others on Wall Street are "growing
increasingly wary of a possible delay in the deal"