Georgia Insurance Commissioner Negotiates for State Financing in Anthem-WellPoint Merger
To help push along the proposed merger of insurers Anthem and WellPoint Health Networks, Georgia Insurance Commissioner John Oxendine (R) and CEO Larry Glasscock on Tuesday discussed a "financial proposal to make health care improvements in the state," the Atlanta Journal-Constitution reports. Oxendine in July rejected the merger deal after approving it in June, saying that it did not include any financial commitments to the state, where WellPoint has 3.1 million members through its subsidiary, Blue Cross Blue Shield of Georgia (Miller, Atlanta Journal-Constitution, 11/11).
The proposed merger, announced in October 2003, would combine the companies under the name WellPoint and establish headquarters in Indiana. The deal would create the largest U.S. health insurer, serving 28 million people in 10 states and Puerto Rico. Glasscock would be CEO of the new company, and WellPoint CEO Leonard Schaefer would be the chair. Anthem and WellPoint shareholders, as well as a number of entities with direct regulatory authority -- such as the Department of Justice, nine other states and Puerto Rico -- previously had approved the merger.
Oxendine, who in July rescinded his earlier approval of the merger, on Tuesday said in a statement that he would review recent developments in California, where Insurance Commissioner John Garamendi (D) on Tuesday announced that he would drop his opposition to the merger, after the companies offered a $265 million financial deal to the state. The California deal also includes 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. After Garamendi in July announced that he would not approve the proposed merger, insurance regulators in Georgia and other states raised new concerns over the solvency of WellPoint and the terms of the merger.
While analysts expect the merger to be approved by all regulators and possibly completed by as soon as the end of November, the companies' agreement with California must now be reviewed by all the states (California Healthline, 11/10). Anthem officials on Thursday said the company is discussing the California deal with regulators in the nine states with authority over the merger.
Oxendine said he rejected the merger proposal in July because he "felt like Georgia citizens deserved better," adding that his staff is "deciding what the appropriate action should be." He said, "There will be sweetening in Georgia." Anthem spokesperson Ed West said the company would not comment on ongoing negotiations with state regulators.
Jamie Court, president of the California-based Foundation for Taxpayer and Consumer Rights, said Garamendi's action could lead to other state regulators striking similar deals. Court added, "Regulators should get some serious commitments, or the policyholders will be left paying the bill" for the merger (Atlanta Journal-Constitution, 11/11). In related news, the Indianapolis Star on Friday examined how states with regulatory authority over the merger "don't wield nearly the clout California did to win concessions of their own" (Swiatek, Indianapolis Star, 11/11).
According to the Journal-Constitution, Oxendine's wife Ivy Oxendine is a Blue Cross of Georgia regional sales executive who also is a WellPoint stockholder. Ivy Oxendine is not one of the 32 Blue Cross executives who are expected to receive bonuses averaging $425,000 if the merger is approved. However, political scientists and a watchdog group in Georgia have said Oxendine's wife "raises conflict of interest issues" for the insurance commissioner, the Journal-Constitution reports.
Oxendine previously has said that by law he can not recuse himself in agency decisions, citing appellate court rulings that have indicated spouses do not represent conflicts of interest. Charlie Harman, a Blue Cross of Georgia vice president, said Oxendine's wife "is not involved in policy discussions either in terms of regulatory or legislative matters" (Atlanta Journal-Constitution, 11/11).
KQED's "This Week in Northern California" on Friday will include an interview with Barbara Feder Ostrov, staff writer for the San Jose Mercury News, about the merger (Feder Ostrov, "This Week in Northern California," KQED, 11/12). Check local listings for show times.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.