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WellPoint acquires WellChoice in giant health insurance merger

Patient Financial Services Weekly Advisor, September 30, 2005

The nation's largest health insurer grew even larger on Sept. 28 when Indianapolis-based WellPoint Inc. acquired New York-based WellChoice Inc. in a deal valued at $6.5 billion in cash and stock, reports the Associated Press.

The deal allows WellPoint to expand into the New York market, which means an additional five million customers-now 33 million in 14 states-and access to nationwide accounts, say company officials.

WellPoint uses the Blue Cross and Blue Shield brand names for its subsidiaries.

The president and CEO of WellChoice, Michael Stocker, says the merger will hold down the rising cost of health insurance. But giant mergers in the industry don't normally lower premiums or increase the benefits for patients, James Rohack, MD, a trustee of the American Medical Association told the Associated Press.

The deal may also prove sour for physicians. The more power an insurance company acquires, the more likely it is to tell a doctor what treatments he or she can or cannot offer, a spokesperson for the Medical Society of the State of New York told the Associated Press.

The transaction is expected to close during the first quarter of 2006.

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