Health plan mega-mergers stalled

A regulator derails the Anthem-WellPoint deal, while a medical society puts a halt to the United-Oxford combination.

By Bob Cook, AMNews staff. Aug. 16, 2004.

California Insurance Commissioner John Garamendi and the Medical Society of New Jersey have initiated similar fights on opposite coasts. Both are trying to stop billion-dollar health plan mergers that they believe do nothing but enrich corporate fat cats at the expense of patients.

Their fight could either be a quixotic tilting of windmills against the inexorable forces of corporate consolidation, or be the mouse that roared to stop the trend to ever-larger health plans. For the moment, the once-inevitable mergers of Anthem Inc. with WellPoint Health Networks, and UnitedHealth Group with Oxford Health Plans -- an expansion of health plan market power that has alarmed the American Medical Association and physicians across the country -- are no longer quite so inevitable.

On July 23, Garamendi issued an order denying Indianapolis-based Anthem's attempt to acquire BC Life and Health Insurance Co., a subsidiary of Thousand Oaks, Calif.-based WellPoint, effectively quashing a $16.4 billion merger between Anthem and WellPoint that would create the nation's largest private health plan.

On Aug. 2, the Medical Society of New Jersey filed a writ against state regulators and United that stayed the Minnetonka, Minn.-based company's $3.7 billion acquisition of Trumbull, Conn.-based Oxford. This acquisition would make the nation's second-largest private health plan even larger.

Both Garamendi and the New Jersey society cited issues like potentially excessive market power, lavish executive bonuses and other factors they believed made the deals a bane for policyholders and patients.