Governor Jerry Brown Signs Bill to Improve Oversight of Health Plan Mergers

For immediate release: September 7, 2018

For more information, contact:

Anthony Wright, executive director, Health Access California, 916-870-4782 (cell)
Rachel Linn Gish, director of communications, Health Access California, 916-532-2128 (cell)

GOVERNOR JERRY BROWN SIGNS BILL TO IMPROVE OVERSIGHT OF HEALTH PLAN MERGERS 

  • Today, Governor Brown signed AB 595 (Wood) to strengthen oversight over health plan mergers
  • AB 595 (Wood) Gives Department of Managed Health Care (DMHC) Increased Authority to Ensure Mergers Are Good for Consumers; Ability to Reject Mergers that Adversely Impact Competition, and/or Impose Public Interest Conditions.
  • Recent Proposed Mega-Mergers (Anthem-Cigna, Aetna-Humana, HealthNet-Centene, BlueShield-Care1st, and currently Aetna-CVS) Revealed Gaps in State’s Authority. Public Hearings Would Be Required for Mega-Mergers.

SACRAMENTO, CA—Today Governor Jerry Brown signed AB 595 by Assemblymember Jim Wood which institutes stronger state oversight over health plan mergers, in a big win for patients and the public interest.

“With concerns about rising premiums, fewer choices, and competition in health insurance, Governor Brown is right to protect consumers with stronger oversight of health plan mergers,” said Anthony Wright, executive director of Health Access California, the statewide health care consumer advocacy coalition, the sponsor of AB 595. “Health plan mergers need to be evaluated to ensure that they are in the interest of patients and public, not just shareholders and executives.”

In California, the top five insurers control over 90% of the market. With health insurance markets already highly consolidated, mergers are likely to result in fewer choices and higher prices for the millions of California consumers enrolled in private coverage. Private insurance premiums and out-of-pocket spending are already high and projected to grow. Health insurance premiums for family coverage have seen a cumulative 216% increase since 2002, compared to a 37% increase in overall prices. Current law gives regulators some oversight over insurer mergers, but they are insufficient to fully protect consumers.

AB 595 will strengthen the Department of Managed Health Care’s (DMHC) oversight over health plan mergers by requiring health plans seeking to merge to get approval from DMHC, allowing DMHC to reject mergers that negatively impact competition, or to impose conditions to protect patients and the public interest, and increases transparency and public participation in the merger review process, including public hearings for mega-mergers.

“Bigger is not necessarily better for consumers, and the state must be able to scrutinize mergers and ensure they are actually good for patients and the public interest,” continued Wright, “AB 595 will protect the millions of Californians who could be negatively affected when a health plan seeks even more market power.”  

AB 595 is one of nine bills that are part of the Care4All California package on the Governor’s desk, that take key steps to make our health system more universal, accountable, and affordable. AB 595 will go into effect on January 1, 2019.

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