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Lawmakers Question WellPoint Merger

November 07, 2003|From Reuters

Four House Democrats raised concerns Thursday that Anthem Inc.'s proposed purchase of Thousand Oaks-based WellPoint Health Networks Inc. would make it harder for Americans to obtain affordable health care.

They urged Federal Trade Commission Chairman Timothy Muris to examine the $13.7-billion deal closely to ensure it would not hurt competition in the market for health insurance or harm consumers. The agency will review whether the transaction violates U.S. antitrust laws.

The combination of Indianapolis-based Anthem and WellPoint, California's leading health insurance company, would form the biggest U.S. medical insurer. WellPoint is the parent of Blue Cross of California.

The lawmakers raising the concerns were members of the House Ways and Means Committee: Reps. Charles B. Rangel of New York, who is the ranking Democrat on the panel, Jim McDermott of Washington, Max Sandlin of Texas and Pete Stark of California.

The Anthem-WellPoint deal follows a trend of consolidation in the managed health-care arena. The American Medical Assn., which tends to oppose such unions, estimates that the 10 biggest health plans insure about half of all insured people in the United States.

Another big concern was what the lawmakers said were the two companies' strategies of converting traditional nonprofit Blue Cross and Blue Shield franchises into for-profit entities.

WellPoint spokesman Ken Ferber said the companies anticipated a thorough review but saw no reduction in competition because by and large the two firms compete in different geographic areas.

"This is a merger of two companies who have Blue [Cross] plans who under the rules of the Blue Cross Assn. do not compete against each other," Ferber said. WellPoint operates in California and Georgia; Anthem in the Midwest and Northeast.

WellPoint shares closed down 97 cents at $87.78, and Anthem shares fell $1.39 to $67.22. Both trade on the New York Stock Exchange.

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