Hearing On Mergers May Get Testy

A proposed merger of the Centene and HealthNet health insurers in California is expected to get tight scrutiny on Friday when the California Department of Insurance holds a public hearing on whether or not that merger should be approved.

Three hearings already have been held by a different state regulatory agency on health insurance company mergers, but this one will have a more open format.

“This one’s going to be different,” said Anthony Wright, executive director at Health Access California.

The first three hearings held by the Department of Managed Health Care included presentations from representatives of the two insurers, statements from the agency and a session where members of the public could make statements of their position on the mergers.

This one also includes presentations by academics and other health care experts, questions from CDI staff, and the opportunity for stakeholders and members of the public to ask their questions about the merger directly to  the insurers.

“This hearing will last for much longer,” said Janice Rocco, deputy commissioner at CDI, “and there may be a good deal more discussion of some of the issues important to the people who contacted the department about the merger.”

That approach likely will set a tone placing the burden of proving why approval is necessary squarely on the insurers.

High-profile mergers and acquisitions of health insurers include Blue Shield of California, which received approval from DMHC and completed its $1.2 billion acquisition of Care 1st in October. That transaction did not need to be reviewed by CDI.

Other proposed mergers and acquisitions involving Calfornia insurers include:

  • Anthem’s acquisition of Cigna for $52 billion;
  • Aetna’s purchase of Humana for $37 billion; and
  • Centene’s $7 billion takeover of HealthNet.

All three of the remaining proposed deals need to receive approval by both agencies  — DMHC and CDI. If the conditions of approval between the two agencies are different, the insurers would need to meet all of the requirements set by the two departments.

Concerns raised so far about the mergers, Rocco said, include impact on market competition, impact on premiums and “on whether or not these mergers are in the general interest of the public,” she said.

“This hearing is the opportunity for interested stakeholders to communicate about whether the merger would be approved, and to raise any concerns or reasons they would support it,” Rocco said.

Friday’s hearing in Sacramento, scheduled to start at 11:30 a.m., is expected to last six hours.

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