Citing excessive bonuses to top company executives, the California Public Employees' Retirement System (CalPERS) -- the state's largest purchaser of health care -- announced it would oppose the proposed merger of WellPoint Health Networks and Anthem Inc. CalPERS, which owns 721,840 shares of WellPoint stock and 612,938 shares of Anthem stock, also announced plans to call on the Department of Managed Health Care to hold a public hearing to consider whether the excessive executive pay outs violate laws governing HMOs and health insurers. CalPERS said it would urge other large institutional shareholders to oppose the merger as well.
"Governor Schwarzenegger cannot ignore the state's largest purchaser of health care and must require his administration to conduct extensive public hearings and oppose the merger unless significant patient protections are adopted," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. "Hundreds of millions of dollars in pay-outs to HMO executives would undermine patient care and the stability of the merged company."
Previously confidential documents acquire last week by FTCR disclosed that under the terms of the proposed acquisition of WellPoint Health Networks by Anthem Inc. executives would be awarded up to $607 million in cash and stock. WellPoint is the parent company of Blue Cross of California.
In a letter sent earlier today, FTCR called on Schwarzenegger to require his Department of Managed Health Care to conduct public hearings to allow adequate review of how the merger will impact patient care.
The Department of Managed Health Care (DMHC), the state agency with significant approval authority to protect patient care, has to date refused to schedule public hearings despite a history of such hearings. The Department has also refused to release approximately 500 pages of documents detailing aspects of the merger.
Governor Schwarzenegger, who's Administration oversees the Department of Managed Health Care, has received $92,400 in campaign contributions to his various fundraising committees from WellPoint and its executives.
The complete letter may be read at: http://www.consumerwatchdog.org/healthcare/rp/rp004375.pdf