Anthem/Wellpoint Merger rejected

California Department of Insurance Commissioner John Garamendi on Friday rejected the proposed Anthem/WellPoint merger, stating Californians would have to pay for the $16 billion deal.



Mr. Garamendi made his announcement soon after the California Department of Managed Health Care (DMHC) had approved the merger. The DMHC had negotiated a $122 million investment in California health-care services with Anthem and WellPoint.

Both WellPoint and Anthem are members of the Blue Cross Blue Shield Association and their merger would create the largest health plan in the country. Blue Cross of California is a subsidiary of WellPoint.

The United States Attorney General's office, shareholders, Blue Cross Blue Shield Association and 10 states have approved the deal.



The department had negotiated a deal to protect consumers in four different areas - improve quality of care, ensure premium dollars are spent on health care, protect enrollee and improve access to care.

Blue Cross had promised to invest $17 million in areas to improve quality of care for its members in the areas of mental health, childhood obesity and quality physician standards. With this investment, the company's goal is to improve its "fair" rating on the state's HMO Report Card.

Blue Cross had vowed not to use California premium dollars to pay for the estimated $4 billion merger deal and will file financial reports with the state to show its compliance with the state.

The health-care provider said it would continue to offer health insurance to the poor through government-sponsored insurance programs such as Medi-Cal, Access for Infant and Mothers Program and Healthy Families.

Blue Cross committed 2 percent of its current investment portfolio, estimated at $100 million, to improve access to care in rural and underserved communities which would be invested over 20 years.

The WellPoint Foundation had said it would invest $5 million per year over three years in outreach efforts to increase enrollment in the Healthy Families Program.