CMA Statement on WellPoint Health Network's Bid to Purchase Aetna Inc.
SAN FRANCISCO, March 2 /PRNewswire/ -- The Following statement was issued by Jack Lewin, M.D., CMA Executive Vice President: The California Medical Association is deeply troubled about the potentially harmful effects to patients should WellPoint Health Network succeed in its current attempt to purchase Aetna Inc. Throughout the past few years, CMA has raised concerns about the ongoing consolidation of health plans in California. A recent CMA study, "The Coming Medical Group Failure Epidemic," points out that just five health plans currently control 90 percent of the health care insurance market in this state. Aetna, which just last year bought Prudential Health Care, now has 1.5 million enrollees in California. WellPoint, which operates in California as Blue Cross, has 3.7 million enrollees. If the Aetna/WellPoint merger is successful, California patients and employers would see their choice reduced to just four plans. This continued reduction in competition could dramatically decrease consumer choice and raise the cost of health care. CMA is particularly apprehensive about the proposed merger because WellPoint is on record as having one of the lowest "medical loss ratios" in the state. This means that among California health plans WellPoint is among those who spent the least on actual health care. In 1997-98 WellPoint paid just 76.5 cents on the dollar for health care while devoting the rest to administrative costs and profit. Aetna, on the other hand, spent nearly 90 cents on health care. CMA predicts that if this merger receives government approval, patients and health insurance purchasers may see more of their premium dollar diverted to corporate profits and less devoted to patient care. It is precisely because of the threat to patient care and choice posed by rampant HMO consolidation that CMA has sponsored Senate Bill 2007, introduced Tuesday by Sen. Jackie Speier (D-San Francisco/San Mateo). The Quality Health Care Contracts Act would enable physicians to come together and negotiate with these ever-larger plans for contracts that will benefit patients instead of plans. Faced by HMOs wielding near-monopoly power, physicians must be able to come to the negotiating table as equals. The specter of this latest merger makes our legislation even more crucial. The California Medical Association calls on the federal Department of Justice, the Federal Trade Commission and the California Attorney General's office to take a very close, very critical look at this proposed merger. The California Medical Association represents more than 34,000 California physicians from all regions, modes of practice and medical specialties. CMA is dedicated to the health of all Californians.
SOURCE California Medical Association
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