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$16B Anthem-WellPoint Merger Gets One Nod

Associated Press
Published | Updated

SACRAMENTO, Calif. – One state agency approved the proposed $16.4 billion merger Friday between health care giants Anthem Inc. (ATH) and WellPoint Health Systems Inc. (WLP), but the companies said they expected the state insurance commissioner to withhold approval of the deal and stall its completion.

Insurance Commissioner John Garamendi, who could not immediately be reached for comment, scheduled an afternoon news conference in San Francisco to announce his decision.

Company officials said Garamendi's disapproval could create an uncertain timetable for the merger, expected to produce the nation's largest health care insurer covering 28 million people.

"We find it unbelievable that an elected official who claims to protect consumer interests would put his own political ambition over the welfare of the people he is sworn to serve," said WellPoint chief financial officer David Colby.

Garamendi has been one of the merger's leading critics, demanding the companies contribute $600 million to California's uninsured population as a condition of his approval.

The state Department of Managed Health Care (search) announced Friday it has approved the deal, removing one of the final significant roadblocks to merging Indiana-based Anthem and Thousand Oaks-based WellPoint, parent of Blue Cross of California (search ).

The U.S. Department of Justice (search ) and 12 other affected states have already approved the merger.

"We have negotiated a pact that is a good deal for consumers and sends a strong message that California is a state with a competitive and healthy marketplace where business is welcome," said Cindy Ehnes, director of the managed health care department.

Ehnes said WellPoint and Anthem agreed to numerous concessions for the change in ownership of Blue Cross of California, which insures 7 million Californians.

Among them, Blue Cross will invest $17 million in mental health and child obesity programs, up to $100 million across 20 years for health care in rural and underserved communities and $5 million over three years to increase enrollment in the state's Healthy Families Program.