JOHN HANCOCK: SALE OF HEALTH BUSINESS TO WELLPOINT LOOMING
John Hancock Mutual Life Insurance Co. is negotiating theThis is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
sale of its health insurance operations to WellPoint Health
Networks Inc., BOSTON GLOBE reports. Sources warned, however,
that the deal between the Boston-based insurer and the Woodland
Hills, CA-based health plan "could still collapse" (Bailey/Syre,
10/2). WALL STREET JOURNAL reports that the deal's value could
not be determined, but it is likely to include "most or all" of
Hancock's health insurance operations (Scism/Rundle, 10/3).
Premiums from Hancock's group insurance business totaled about $1
billion last year; however, profit from the unit was reported to
be "less than $10 million," according to the GLOBE (10/2).
JOURNAL notes that while the profit margins are "thin," Hancock's
health care operations "would be of enormous strategic value to
PERFECT MATCH: According to the JOURNAL, WellPoint is
"looking to expand" its business beyond its strong California
base, while Hancock is "the latest in a line of insurance
companies to decide to shed health care operations rather than
plow more money into them to keep abreast of changing health care
demands of employers." The sale would add about two million new
members to the 4.3 million people WellPoint already serves, and
the acquisition would "bolster its position with large employers
... who buy a broad spectrum of health care products."
WellPoint's management believes that employers and patients "are
looking for more choice in health care plans." The company also
contends that HMOs have "peaked in popularity," and that
purchasing insurers like Hancock will allow WellPoint to get
involved in traditional health insurance and launch "less
restrictive" forms of managed care like open-access HMOs (10/3).