California Insurance Commissioner John Garamendi held a hearing last Friday and raised serious concerns over the impact of a $16 billion deal on California’s health care consumers
Garamendi issued the following statement regarding the hearing on the proposed merger:
“I have a duty as Insurance Commissioner to protect our state’s consumers. As such, I have serious concerns as to the impact of this proposed deal. Will it provide better quality health care for consumers? Or will it simply enrich a select group of executives and stockholders, who stand to pocket nearly $4 billion worth of compensation packages and stockholder cash? It is essential that these questions be answered before this deal is approved.
“Today’s hearing clearly showed that the terms of the merger, as proposed, must be supplemented. As it stands now, the cost of this transaction will likely be financed through higher health care premiums and reductions in the quality of care. That must not happen. Therefore, it is imperative that strong agreements be forged now to ensure the future of our health care safety net. If not, we may all end up footing the bill.”
Anthem Inc. (“Anthem”) has filed a Form A Statement Regarding the Acquisition of Control of or Merger with a Domestic Insurer (the “Form A”) with respect to BC Life & Health Insurance Company (“BC Life”). The Form A seeks the approval of the California Department of Insurance (“DOI”) for the change of control of BC Life that would occur upon the proposed merger (“Merger”) of BC Life’s ultimate parent company, WellPoint Health Networks Inc. (“WellPoint”) with and into an unaffiliated entity, Anthem Holding Corp. (“AHC”). AHC is an Indiana corporation and is a wholly-owned subsidiary of Anthem, which is the ultimate parent company of a number of Blue Cross and Blue Shield companies that operate outside California.
Upon the closing of the Merger, WellPoint will be merged with and into AHC, with AHC as the surviving entity, and the separate corporate existence of WellPoint will cease effective as of the closing of the Merger. As a result, this transaction will result in a change in control of BC Life, which will become an indirect subsidiary of Anthem. Also at the time of the Merger, Anthem will be renamed “WellPoint Inc.”
The transaction will not result in any other material changes to BC Life or have a material effect on BC Life’s operations. BC Life is an affiliate of Blue Cross of California (“BCC”), a health care service plan regulated under the Knox-Keene Health Care Service Plan Act. BCC will also become an indirect subsidiary of Anthem as a result of the Merger.
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