Consumer Advocacy Group Calls for Public Hearing on Anthem/WellPoint Merger
Consumer advocacy group Foundation for Taxpayer & Consumer Rights on Wednesday requested that Schwarzenegger administration officials hold a public hearing before approving a proposed merger between Indiana-based Anthem and Thousand Oaks-based WellPoint Health Networks, the Indianapolis Star reports (Swiatek, Indianapolis Star, 5/20). Under the merger that was proposed last October, the combined company, which would use the name WellPoint and have its headquarters in Indianapolis, would have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states. In California, WellPoint provides health insurance for seven million state residents through subsidiary Blue Cross of California. State law does not require a public hearing on the proposed merger, but Insurance Commissioner John Garamendi (D) said that he supports a joint hearing conducted by the Department of Insurance and the Department of Managed Health Care. The state has held public hearings on similar mergers in the past, but DMHC officials said the proposed merger between Anthem and WellPoint is different because it would not affect consumer choice or competition because Blue Cross of California would continue to operate (California Healthline, 5/19).
FTCR President Jamie Court on Tuesday sent a letter to DMHC Director Cindy Ehnes, saying, "There are serious corporate governance and executive compensation issues that Anthem and WellPoint executives must answer to the California public for." According to the Star, the consumer group is concerned about pending lawsuits against both Anthem and WellPoint from doctors who provide services to members, alleging they have been underpaid by the insurers. The letter also says that Anthem's top executive will receive a $42.5 million three-year cash and stock award. Deborah New, spokesperson for Anthem, said, "We will abide by whatever the regulators think is necessary and in the best interest of the process." G. Lewis Chartrand, DMHC chief deputy director, said that the department is expected to issue an order in the next several weeks. Anthem and WellPoint shareholders are expected to vote on the merger June 28. If the deal receives stockholder and regulatory approval, the merger could be completed as early as July 1, according to the Star (Indianapolis Star, 5/20). Court's letter is available online.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.