Anthem, WellPoint merge into largest health plan

The combined company, which operates many BlueCross BlueShield insurers, prompts physician misgivings about how the new WellPoint will wield its power.

By Robert Kazel, AMNews staff. Dec. 20, 2004.

When IBM dominated the computer industry, it was called Big Blue. With a merger now complete between Blue Cross and Blue Shield giants Anthem and WellPoint Health Networks, the health care industry has a dominant company it could call Big Blues.

The merger, effective Nov. 30, created an Indianapolis-based health insurance colossus with the name of WellPoint Inc. The company covers about 28 million members in 13 states, primarily under Blue Cross and Blue Shield brands, making WellPoint the largest publicly traded health plan in the nation. Nationally, about 88 million people are in Blues plans.

The value of the transaction, structured as an acquisition of California-based WellPoint by Indianapolis-based Anthem, was set at $16.5 billion when the plan was announced in October 2003, though its fair-market value at the time of the merger was approximately $20.8 billion, the company said.

Samuel R. Nussbaum, MD, former chief medical officer and executive vice president of Anthem, said he did not believe the merger would harm competition or diminish reimbursements for physicians in WellPoint's networks.

But Donald J. Palmisano, MD, immediate past president of the American Medical Association, criticized mergers such the Anthem-WellPoint deal as potential threats to free trade in health care because they're rapidly reducing the number of competitors vying for business. The resulting few large plans, wielding far greater power, could be in a better position to dictate patient care against doctors' wishes or demand unfair terms when bargaining with physicians, he said.