Secret Details of WellPoint & Anthem Merger Would Allow Company to Remove $650 Million From CA

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Give Lip Service to Patient Protections

The secret details of on-going negotiations between state regulators and WellPoint executives in the pending merger between WellPoint Health Networks Inc. and Anthem Inc., made public today by the Foundation for Taxpayer and Consumer Rights, are ridden with loopholes according to the consumer advocacy group.

The draft so-called “undertakings,” which provide the basis for the state Department of Managed Health Care‘s approval of the merger, “Allow the merged company to remove $650 million in premium funded reserves from the state and fail to provide any real patient protections,” according to Jerry Flanagan of FTCR.

“It’s audacious that at the same time that executives are cashing out with $600 million in bonus pay that the Schwarzenegger Administration would allow the companies to transfer $650 million out of the state,” said Jerry Flanagan. “These undertakings are a licensed to steal from California patients and business owners who paid for these reserves in the form of premiums that were supposed to pay for health care, not executive profiteering.”

Since legislative hearings on the merger last week, WellPoint Health Networks, its California subsidiary Blue Cross of California, and Anthem Health Networks Inc. have been widely criticized over proposed executive payouts of up to $600 million in cash and stock. The Schwarzenegger Administration’s Department of Managed Health Care has broken with tradition dating back to the Wilson Administration by refusing to hold public hearings on the merger. The Department has also refused to release 500 pages of documents providing details of the proposed merger.

“The details of the Schwarzenegger Administration’s negotiations have holes in them big enough to drive a Hummer through,” said Jerry Flanagan of FTCR. “The failure of these secret negotiations to adequately protect patients is exactly why we called on the Administration to hold public hearings in the first place. Public scrutiny will undoubtedly provide a more rigorous set of requirements.”

Governor Schwarzenegger has received $92,400 in campaign contributions to his various fundraising committees from WellPoint and its executives.

The most egregious of the nine are provisions that allow the new merged company to remove $650 million in Blue Cross of California’s premium funded reserves. At the recent legislative hearings Anthem CEO Larry Glasscock testified that Anthem, not Blue Cross of California, would pay for the executive severance packages and bonuses.

The remaining undertakings fail to provide any real protections for patients and allow the merged company great latitude to drop individuals and employers from coverage and refused to treat low-income and disabled patients.

“These undertakings will bury consumer protections in California. For the good of California patients, the Department of Managed Health Care must cease and desist all secret negotiations and immediately schedule public hearings,” said Jerry Flanagan.

To view the draft undertakings, please visit:


The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy group. For more information, visit us on the web at

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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