Consumer Group Says $792 Million & Patient Care in Jeopardy
Citing concerns that a pending buyout of Blue Cross of California’s parent company would allow executives to siphon $792 million, the Foundation for Taxpayer and Consumer Rights called on the Schwarzenegger Administration in a letter sent today to delay its decision on the merger and conduct public hearings.
Previously confidential documents acquire last week by FTCR disclosed that under the terms of the proposed acquisition of WellPoint Health Networks by Anthem Inc. executives would be awarded up to $607 million in cash and stock. In jeopardy, says FTCR, is $792 million in excess premium funded reserves that could to be used to pay for the excessive executive bonuses. In the letter sent today FTCR wrote:
“Those reserves represent payments made to Blue Cross of California in good faith by patients and employers to secure health care coverage. Every dollar siphoned away from the company means that patients and business owners must pay more for less health care or face cutbacks in coverage benefits, quality or access to care. ‘The excess reserves must be kept in the state and, i) refunded to Blue Cross of California enrollees whose premiums have paid for the reserves; or, ii) held in trust to provide health care for the thousands of California families that cannot afford skyrocketing health care costs.”
According to documents filed with the Department of Managed Health Care, $188.5 million of Blue Cross of California reserves have already been liquidated. As of December 31, 2003 Blue Cross had $986.4 million in excess reserves. As of March 31, 2004 those reserves decreased to $792.9 million.
The Department of Managed Health Care (DMHC), the state agency with significant approval authority to protect patient care, has to date refused to schedule public hearings despite a history of such hearings. The Department has also refused to release approximately 500 pages of documents detailing aspects of the merger.
Governor Schwarzenegger, who’s Administration oversees the Department of Managed Health Care, has received $92,400 in campaign contributions to his various fundraising committees from WellPoint and its executives.
The complete letter may be read at: http://www.consumerwatchdog.org/healthcare/rp/rp004375.pdf
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The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy group. For more information, please visit us on the web at http://www.consumerwatchdog.org or http://www.calhealthconsensus.org