CMA Statement on WellPoint Health Network's Bid to Purchase Aetna Inc.

Mar 02, 2000, 00:00 ET from California Medical Association

    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