Merger Watch

Consolidation in the health industry often means fewer choices and competition, with no benefit for patients or the public. Health insurance companies should not be allowed to get bigger unless they get better. In California, the top five insurers control over 90% of the market. Health Access  closely monitors mergers and advocates for strong consumer protections and other conditions to ensure that these mergers are in the interest of California consumers and the health system on which we all rely.

In seeking regulatory approval for these mergers, the burden is on the merging companies to show that consumers will actually benefit in the form of lower premiums, lower out-of-pocket costs, higher quality care, and reduced health disparities.

With several pending insurance mega-mergers, insurers must be required to comply with strong, enforceable conditions to ensure consumers receive the benefits promised by company executives and should be required to address any existing problems relating to cost, quality, and customer service.

Health Access Letters

Adventist Health – St. Joseph’s Health System

AB 595 (Wood, 2018) to Improve Oversight of Health Plan Mergers

With the landscape of health plans becoming increasingly consolidated, new legislation was signed into law in 2018 to institute stronger state oversight over health plan mergers, in a big win for patients and the public interest.

AB 595 strengthens 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. Health plan mergers need to be evaluated to ensure that they are in the interest of patients and public, not just shareholders and executives.


The US Department of Justice has approved the merger of CVS Health and Aetna, continuing the trend of “diagonal” mergers and the further consolidation of mega-health care corporations. This is unprecedented merger: between CVS, a major pharmacy chain and one of the nations largest independent pharmacy benefit managers (PBM), and Aetna, one of the nations largest insurers, consolidates the health industry further.

Cigna-Express Scripts

Cigna Health Insurance is seeking to purchase Express Scripts, one of the nation’s largest pharmacy benefit managers (PBM). Similar to the CVS-Aetna merger, this proposed merger continues the trend of “diagonal” mergers within the health care industry.

Nonprofit Hospital Mergers – Maintaining Charity Care

Nonprofit hospitals seeking to sell or change ownership must get approval from the Attorney General (AG), who evaluates whether the transaction will have a significant effect on the availability or accessibility of health care services to the affected community. The AG often requires hospitals to maintain their charity care programs as a condition of approving the transaction, along with other conditions to ensure essential health care services are available to the community. A number of hospitals have gone back and asked the AG to allow them to reduce their charity care obligations. Health Access opposes these requests because charity care continues to be a needed and valued part of the safety net.


Anthem, one of the largest insurers in the state and nation, proposes to acquire Cigna for $48.3 billion. This merger would consolidate the national health insurance market from five major companies to just three. California regulators are reviewing this merger.

Centene-Health Net

Centene proposal to acquire Health Net for $6.8 billion was approved by both the DCI and DMHC in March of 2016. This merger will allow Centene to have a significant presence in California, gain entry into our commercial market and Covered California and drastically increase its participation in the Medi-Cal program by nearly sevenfold.


Aetna is proposing to acquire Humana, a large player in the Medicare Advantage market. Aetna has a troubling track record in California’s commercial market, including imposing unreasonable rate increases on small business purchasers. This merger raises concerns about its effects on California’s commercial market, where most of Aetna’s California business is based. The merger will also impact the Medicare marketplace, resulting in less competition and fewer options for California consumers.

Blue Shield-Care1st

The merger between Blue Shield of California and Care1st was completed in November 2015. Blue Shield, a large California-based insurer, purchased Care1st, a Medi-Cal managed care health plan in Southern California. Blue Shield’s acquisition of Care1st enabled Blue Shield to participate in California’s Medi-Cal program for the first time. In addition to our concerns about consumer protections, the Blue Shield-Care1st merger raises questions about Blue Shield’s nonprofit status and assets, including the $4.2 billion it holds in excess reserves and if those assets are subject to charitable trust obligations.

Nonprofit Hospital Mergers – St. Joseph-Providence Hospitals

St. Joseph and Providence are two major Catholic hospital chains with facilities throughout California. Health Access has requested the Attorney General to ensure that all existing hospital services remain open for at least ten years, require existing reproductive health services to be maintained, and more robust charity care to meet ongoing access and affordability needs of communities served by these hospitals. We also raise concerns about how this merger might lead to higher prices and less competition.

Nonprofit Hospital Mergers – Daughters of Charity Health System

In December 2015, the Attorney General granted conditional approval of a change of control and governance of the nonprofit Daughters of Charity Health System (DOCHS), allowing BlueMountain Capital Management to operate DOCHS’ six hospitals and gain a right to purchase the chain. Health Access advocated for strong conditions to ensure the hospitals and current services remain open for ten years and charity care is maintained.

The Attorney General previously granted conditional approval of the sale of DOCHS to Prime Healthcare, a for-profit company. Health Access opposed this merger unless it included strong conditions to ensure DOCHS’ hospitals and services would remain open to the community. Prime Healthcare subsequently backed out of the deal.