Nation's largest private health insurer wants to get even bigger

WellPoint seeks to acquire the parent of New York City's Blues plan, and physicians aren't thrilled.

By Katherine Vogt, AMNews staff. Oct. 17, 2005.

The proposed $6.5 billion merger of WellPoint Inc., the nation's largest private health insurer, and WellChoice Inc., the owner of Empire BlueCross BlueShield in New York, has critics crying foul that the already consolidated managed care industry is narrowing even more to a few mega-companies that essentially have monopolistic control of some markets.

The deal, if approved by regulators, would give WellPoint its first entry into New York state and also into the New York City metropolitan area. Analysts echoed WellPoint president and chief executive officer Larry Glasscock's assertion, in a conference call to investors, that the deal gives WellPoint a stronger base for negotiating national contracts with more large companies, given that New York is the base of more Fortune 500 companies than anywhere in the nation.

The merger, announced Sept. 27, also would strengthen WellPoint's position in consumer-directed health plans, a market that WellChoice has aggressively pursued in the last year.

The combined company, under the WellPoint umbrella, would serve more than 33 million members and operate as a Blue Cross or Blue Cross Blue Shield licensee in 14 states.

Physicians, as they have in past health plan mergers, were alarmed at the WellPoint-WellChoice deal.

"It's a trend of more market power being concentrated into the hands of fewer dominant health plans. That can't be good for competition, and it can't be good for consumers. And we don't believe that it will be good for patients and their physicians because there will be less choice," said Donald Moy, general counsel for the Medical Society of the State of New York.