Consumer advocates are urging the Department of Managed Health Care to "use its full authority to impose comprehensive requirements to protect consumers before allowing the merger between Centene and Health Net to move forward."
Consumer Watchdog sent a letter to the regulator last week, detailing several safeguards the group would like included in the proposed deal that would create a company with more than 10 million members nationwide and about $37 billion in revenue.
Health Net serves more than 1.8 million Medi-Cal enrollees in California and has about 18% of the insurance enrollment through Covered California. Centene, based in St. Louis, proposes to buy Health Net for $6.8 billion.
Consumer groups have been critical of a previous deal allowing Blue Shield of California to purchase Care1st. They contend Blue Shield is reneging on a commitment to contribute an additional $140 million to charity over the next 10 years they say was part of the agreement allowing the merger.
Consumer Watchdog's letter concludes:
"Centene and Health Net claim that the merger will increase competition, improve care and benefit consumers. Unfortunately, health care mergers generally lead to the opposite: fewer choices, inadequate physician networks and higher premiums. This is DMHC's one chance to protect consumers. Make these two companies stand behind those claims or pay the price."
DMHC, Centene and HealthNet responded by email to California Healthline questions about the merger.
DMHC's response said:
"Our primary focus in reviewing these mergers is to ensure compliance with the strong consumer protections and financial solvency requirements of the Knox-Keene Act.
"We appreciate and consider all public comments regarding the mergers. We want to be as inclusive as possible in our review, and given the public interest on the mergers, we intend to hold a public meeting on each significant merger before the Department. A public meeting was held last Monday (12/07) regarding the Centene/Health Net merger.
"Consumer Watchdog has highlighted areas the Department has included in its review of previous mergers, and will continue to look at as we review the pending merger requests."
Health Net's response, which included copies of several letters supporting the proposed deal, said:
"We believe our combined company would strengthen Health Net's existing businesses, enhance our focus on value-based solutions, allow us to retain our strong commitment to California, and enhance competition in the state. With market consolidation creating concern in the marketplace, our proposed merger offers a different approach to combining complementary services and service areas. This proposal brings similar thinking and additional resources to California, resulting in strengthened product lines for consumers."
The University of California Office of the President, Los Angeles Area Chamber of Commerce, National Hispanic Medical Association and other groups have written DMHC supporting the proposed merger.
Centene's response said:
"Centene's core philosophy is that health care is best delivered locally. This approach enables us to provide access to health care services that are high quality and sensitive to the unique and diverse needs of the communities we serve.
"California Health & Wellness, a Centene subsidiary, entered the market three years ago and was the first new commercial entrant in the California Medi-Cal market in over 20 years. California Health & Wellness has partnered with many local organizations to implement programs that have already made a significant impact on the California communities we serve, including rural and often underserved areas. We are proud to support these organizations that serve low-income and culturally diverse individuals, as well as seniors and people with disabilities."