$126M Ga. Agreement Could Pave Way for Anthem-WellPoint Merger

November 30, 2004

Georgia Insurance Commissioner John Oxendine and Anthem Inc. have reached an agreement in which Anthem will pledge $126 million to improve rural health care for the poor in Georgia – in return, Oxendine agreed to re-approve the acquisition of California-based WellPoint Health Networks, the deal will create the nation’s largest health insurance company.

Oxendine’s approval removes the final hurdle blocking the merger between California-based WellPoint and Indiana-based Anthem. WellPoint owns BlueCross BlueShield of Georgia.

Oxendine gave initial approval to the merger on June 8, but later said the California incentives changed the conditions of the merger and required him to review it again. He insisted on re-approving the merger after California’s insurance commissioner negotiated a $265 million package from Anthem earlier this month. The Georgia package includes $11.5 million in cash, $15 million in health claims reimbursements over three years and $100 million in investments over 20 years, Oxendine said.

“It’s the largest rollout of a telemedicine network in the United States,” Oxendine said.

The money from Blue Cross-Blue Shield of Georgia, which Anthem will own when it buys WellPoint, will pay for 36 clinics and medical equipment, including telemedicine centers at 36 rural Georgia hospitals, clinics and the state’s four teaching hospitals. It will cover telemedicine procedures in its insurance benefits. Thorough telemedicine a patient in a rural part of the state can be diagnosed by a specialist in a larger hospital via teleconferencing technology.

About 3.1 million Georgians are enrolled in a WellPoint health benefits plan. Georgia will have the second largest enrollment among the 13 states where the combined Anthem-WellPoint system sells Blue Cross and Blue Shield policies. California, where WellPoint is based, has the largest membership, with about 7 million people covered by a WellPoint health plan.

Anthem also agreed to help rural Georgia health centers expand, renovate and upgrade equipment by purchasing their bonds and other debt instruments over the next 20 years, Oxendine said. Anthem promised that the merger would not lead to higher insurance premiums for Georgia BlueCross policyholders, Oxendine said.

Earlier this year, California’s insurance regulator dropped his objections to the planned merger after the companies agreed to pay $600 million to help cover the costs of treating that state’s uninsured residents.

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