Will State Agency Protect CA Consumers in Centene/Health Net Merger?

Let's hope that the state's Department of Managed Health Care (DMHC) is tougher on Centene and Health Net and their proposed merger than it was at a recent public meeting. 

In a letter sent to the DMHC, Consumer Watchdog urged the agency to prohibit Centene from shuttering any of Health Net's commercial plans, require it to upgrade any physician network issues and prevent executives from removing any reserves from California to pay for lavish compensation packages related to the deal. 

"DMHC has the authority to deny or require changes to the “Change in Control” request and should use it in order to assure continued access to quality health care and provide the full protection of state laws governing health plans," Consumer Watchdog wrote. "These types of mergers pose risks that include the further narrowing of physician networks, higher premiums, higher out-of-pocket costs (deductibles, co-pays and coinsurance) and fewer health insurance choices." 

Read the letter here: http://www.consumerwatchdog.org/resources/centene_health_net_merger_.pdf

This is DMHC’s one chance to protect consumers, and the agency should make these two companies stand behind those claims or pay the price.

At the hearing, Centene and Health Net claimed that the merger will increase competition, improve care and benefit consumers. Unfortunately, healthcare mergers generally lead to the opposite: Fewer choices, inadequate physician networks and higher premiums. If the public hearing Monday was any indication, we are wary about the agency's resolve. When a public hearing is really about the show and not the substance, when representatives simply read press releases, no questions are asked of anyone testifying and the public gets little input -- it's not a good sign. 

Centene’s proposed acquisition of Health Net will create a health insurance company with more than 10 million members nationwide and about $37 billion in revenue. It has to be approved by DMHC and the California Department of Insurance.

It's an alarming development in an unprecedented wave of insurance mergers, including Aetna with Humana and Anthem with Cigna. But the tone of this week's hearing appeared to be more about checking off the transparency box then getting answers on how this will affect Californians. 

DMHC's director, Shelley Rouillard, started off the proceeding by saying how lucky the public was even having a meeting. She mentioned transparency but reminded the audience, in the room and listening on the phone, that it "is not required under law." 

In their prepared statements, Health Net and Centene praised their companies, praised each other and were adamant that the consolidated companies would increase competition, improve quality and benefit consumers. No specifics, just a nice corporate "trust us" vibe. 

After their blather, audience members spoke during the public comment about concerns over Health Nets' record in California and how will this consolidation improve quality of care or benefit consumers. Unlike a real hearing, where these very basic questions would be asked, none were. Also, people listening in by phone, which based on the clicks of people getting on the line sounded like dozens, were unable to ask questions. That zipped the meeting right along. 

Rouillard ended the meeting, saying, "We will do a full review of all aspects of both plans’ operations and whether the plans are doing a good job serving consumers" targeting the "New Year" to make a decision. 

People can still send in comments, at [email protected], with specifics on possible conditions that DMHC should impose. But if this meeting was any guide, it's unlikely to be tough enough to protect consumers. Let's hope when CDI gets its chance, it will be a little tougher. 

Capitol Watchdog is owned and operated by nonprofit Consumer Watchdog. For more information about Consumer Watchdog visit http://www.consumerwatchdog.org