California panel will scrutinize $16.4 billion takeover of WellPoint

The Indianapolis Star

Anthem Inc. and WellPoint Health Networks face a public hearing next week in California on their proposed $16.4 billion merger.

The June 9 hearing, by a legislative panel recently formed to scrutinize health insurance mergers, will air growing concerns by politicians and consumer advocates about Anthem’s proposed takeover of WellPoint.

WellPoint is California’s largest health benefits company, with 7.5 million members enrolled in its Blue Cross plan. The for-profit California company agreed last year to be acquired by Indianapolis-based Anthem, a fellow Blues plan licensee.

The merger would make publicly traded Anthem the nation’s largest health benefits company.

Only California and Georgia have yet to approve the merger, out of the 10 states with a direct say in the deal.

California is by far the largest state served by WellPoint.

Information gathered at the two- to three-hour hearing will be used to “make recommendations to the leadership and policy committees” in the California Assembly, said Saeed Ali, chief of staff for Assemblyman Manny Diaz, D-San Jose, who chairs the Select Committee to Investigate the Merger of California Health Insurance Providers.

Ali said the committee will invite testimony from WellPoint and Anthem, state regulators, health policy analysts and consumer and health provider groups. Their brief, five-minute statements will be “followed by lots of intensive questioning,” Ali said.

The hearing will “air the whole range of concerns about how this merger could negatively impact patient care,” said Jerry Flanagan, consumer advocate for the Foundation for Taxpayer and Consumer Rights, a California consumer group that will take part in the hearing.

Flanagan said his group wants to know how Anthem might try to change the terms of existing Blue Cross policies in California and contracts with doctors and hospitals once it takes over WellPoint

“We will certainly participate” in the hearing. “We’ll answer any of their questions,” Anthem spokeswoman Deborah New said.

WellPoint officials will be there as well, though it’s not been decided if its chief executive, Leonard D. Schaeffer, will testify, spokesman Ken Ferber said.

The two companies want to complete their merger by mid-year.
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Contact Star reporter Jeff Swiatek at (317) 444-6483 or [email protected]