New York Times Examines Potential ‘Far-Reaching Implications’ of Anthem-WellPoint Merger
The New York Times on Thursday examined the potentially "far-reaching implications" in the insurance industry created by the union of WellPoint Health Networks and Anthem (Freudenheim, New York Times, 10/30). Officials from Indiana-based Anthem on Monday announced an agreement to purchase California-based WellPoint Health Networks for $16.4 billion in cash and stock. The combined company, which will use the name WellPoint and have its headquarters in Indianapolis, will have $27.1 billion in assets, 40,000 employees and 26 million members in 13 states (California Healthline, 10/28). Some analysts see the merger as a "simple message" that the "glory days are fading for health insurers," according to the Times. Howard Phanstiel, a former WellPoint executive who is now president and CEO of PacifiCare Health Systems, said, "Some insurance companies are pricing below what we believe the medical cost trend is, as people compete to improve their top-line revenues in the face of a sagging economy." Jeff Goldsmith, president of health industry consulting firm Health Futures, said, "The insurance industry is running out of the ability to charge 12% to 15% premium increases." However, Leonard Schaeffer, current chief executive at WellPoint, who will become chair of the combined company, has said that the insurer will continue to raise premiums "just enough to stay ahead" of reimbursement increases to providers, the Times reports. In addition, the new company will use its member base to "gather enough information to manipulate and analyze so we can give people guidance about the effectiveness of health care procedures, the effectiveness of individual practitioners, of this option and that option," Schaeffer said. Although both WellPoint and Anthem have been acquiring Blue Cross and Blue Shield plans in different states, analysts expect that the combined company will take about two years of transition before resuming acquisitions (New York Times, 10/30).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.