The $16.4-billion purchase of WellPoint Health Networks Inc. by Anthem Inc. was approved Monday by shareholders of both companies, setting the stage for a union that would create the nation’s largest health insurer.
The acquisition still needs the OK of regulators in California, where the deal has been embroiled in controversy over a potential $600 million in cash bonuses and stock options that could be paid to nearly 300 executives of Thousand Oaks-based WellPoint.
The acquisition, favored by 97% of the companies’ shareholders, “brings together unprecedented resources to drive innovation in health benefits and improve the health of our members,” said Larry C. Glasscock, chief executive of Indianapolis-based Anthem. “It also will produce significant cost savings and will better position us to keep healthcare affordable for millions of members.”
Lawmakers, regulators and consumer advocates have questioned whether the deal would benefit Californians. The Department of Managed Health Care, a state agency that oversees health maintenance organizations, is set to hold another in a series of public hearings July 9. The agency is reviewing the firms’ request to transfer WellPoint’s Blue Cross of California license to Anthem.
In addition, state Insurance Commissioner John Garamendi has said he won’t sign off on the deal until the companies agree to spend millions to provide healthcare for the poor.
The California Public Employees’ Retirement System and other public pension funds holding about $350 million in WellPoint and Anthem stock had planned to vote against the deal to protest the bonuses. State Treasurer Phil Angelides, a CalPERS board member and leader of the pension fund opposition, said he knew they faced an uphill battle.
“We will continue to oppose this merger, calling on Gov. [Arnold] Schwarzenegger and his Department of Managed Health Care to condition its approval of any WellPoint-Anthem merger on the elimination of the excessive executive compensation package,” Angelides said.
Anthem executives have said the company would be obligated to pay the bonuses because they were approved years earlier.
The Foundation for Taxpayer and Consumer Rights sent letters Monday urging the the managed-health department and Garamendi to demand WellPoint return $1 billion in what the advocacy group described as “premium-funded reserves” to policyholders.