Department of Managed Health Care To Hold Hearing on Blue Cross of California Premium Increases
The Department of Managed Health Care on Wednesday announced that next month it will hold a public meeting to address consumer concerns that recent Blue Cross of California premium increases are being used to pay acquisition-related expenses for the merger of Blue Cross parent organization WellPoint Health Networks and Anthem, the San Diego Union-Tribune reports (San Diego Union-Tribune, 4/28). Using premium increases to pay such expenses would violate the conditions of California officials' approval of the merger.
The $16.4 billion merger, first proposed in October 2003, combined the companies under the name WellPoint and established headquarters in Indiana. The deal created the largest U.S. health insurer, serving 28 million people in 10 states and Puerto Rico.
Insurance Commissioner John Garamendi (D), who in July 2004 said he would not approve the deal, last November dropped his opposition to the merger after the companies offered a $265 million financial deal to the state. The California deal also included an assurance that the company would increase its expenditures on patient care and not raise premiums for members in California to help pay for the merger.
DMHC previously had approved the merger with a $100 million commitment. The regulations issued last November provide the same consumer protections to members of Blue Cross Life & Health, which is regulated by the Department of Insurance, and Blue Cross of California, which accounts for 96% of WellPoint's business in the state (California Healthline, 4/19).
Blue Cross officials attributed the premium increases to higher health care costs, not acquisition-related expenses. Blue Cross said that the average increase in health plan members' premiums, which took effect in March, was 13% (San Diego Union-Tribune, 4/28).