News CoverageMarketplace Morning Report - MN Public Radio
California's insurance commissioner gives his blessing to a merger between Anthem and WellPoint Networks
by ANCHOR: KAI RYSSDAL - REPORTER: SCOTT JAGOW
Nov 10, 2004
KAI RYSSDAL, anchor: California's insurance commissioner has given his blessing to a huge health-care merger. John Garamendi--there's number three--had stalled the deal between Anthem and WellPoint Health Networks until the two companies agreed to a little payback.
And MARKETPLACE's Scott Jagow reports that could set a new standard for corporate mergers.
SCOTT JAGOW reporting: In a merger, corporate executives can clean up from lucrative bonuses. California's insurance commissioner decided in this case his state should get the same payout. He argued California policyholders would have to bear too much of the debt if Anthem bought WellPoint. He only stopped blocking the deal when the two companies agreed to invest $265 million in clinics, nurse training and a program for the poor. Jerry Flanagan is with the state's Foundation for Taxpayer and Consumer Rights.
Mr. JERRY FLANAGAN (Foundation for Taxpayer and Consumer Rights): What this merger does is set the bar on future HMO and other mergers of all types. If you're going to take money from the state of California, if you're going to take money from patients anywhere in the country, you have to give back an equal sum.
JAGOW: The $16 billion merger would create the nation's largest health insurer. Ten states have already given their OK, but in light of California's move, those states may go back to the companies looking for a similar deal. In Los Angeles, I'm Scott Jagow for MARKETPLACE.