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Media Room
Release date 03/23/2016
SACRAMENTO, CA ― The Department of Managed Healthcare and the California Department of Insurance announced today that they are approving the proposed merger between Centene, Corp. and Health Net, Inc., subject to a number of conditions designed to protect consumers from potential pitfalls of the deal. While these conditions offer some protection for consumers from unjustified health insurance premium rates and require the newly merged plan to improve its services, state regulators must monitor the insurer closely to ensure compliance, according to Consumers Union, the policy and advocacy division of Consumer Reports.
“The benefits of health plan mergers overall are clear for the insurers, but not for consumers,” said Dena Mendelsohn, Staff Attorney at Consumers Union. “We know from past experience that market consolidation usually comes with higher prices. State regulators will need to ensure that Centene and Health Net hold up their end of the bargain to make health coverage affordable and high quality.”
In July, 2015, Centene and Health Net announced their plan to merge with Missouri-based Centene acquiring the California-based Health Net, Inc. This merger is subject to approval by both DMHC and the California Department of Insurance (CDI), each of whom reviewed the proposed merger separately. Consumers Union questioned whether consolidation of the health plans was in the best interest of consumers, and testified on current quality issues and the risk that the newly merged plan may actually eliminate some insurance products offered in California.
As announced by both DMHC and CDI today, approval of the merger of Centene and Health Net comes with a number of contractual obligations, including:
A commitment to maintain key officials and personnel in California, as well as an obligation on Centene to increase its proficiency in the California commercial health plan market.
An agreement to sustain and grow its health plan products offered in California, including those offered through Covered California.
Quickly resolving on-going plan performance issues and improving quality scores by 2019.
Creating and making publicly available an accurate and complete provider directory by July 2016.
Community investments—such as grants to support consumer assistance programs, programs designed to improve health outcomes in underserved areas of California, and contributions aimed at strengthening the Medi-Cal health care delivery system—totaling approximately $140 million as well as investments of $200 million for providing new jobs in an economically distressed community in California.
An obligation for the merged company to come to the table with DMHC to resolve any issues regarding proposed premium rate increases that the Department considers unreasonable or unjustified.
The agreements announced today evidence that many of the consumer concerns were heard by DMHC and CDI. Affordability concerns remain, however, and whether consumer interests are truly protected in the coming years depends on ongoing enforcement by the department. “We recognize that improvement takes time,” noted Ms. Mendelsohn, “and we look to the regulators to continue to pressure these and other plans to continuously improve starting on day one.”
Media Contact:
Michael McCauley, Consumers Union, 415.4316747 ext 7606 or mmccauley@consumer.org
Consumer Reports is a nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.
© 2016 Consumer Reports. The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports® is an expert, independent, nonprofit organization whose mission is to work side by side with consumers to create a fairer, safer, and healthier world. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports® magazine, ConsumerReports.org® and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our prior written permission. Consumer Reports will take all steps open to it to prevent unauthorized commercial use of its content and trademarks.
Consumer Reports is a nonprofit membership organization that works side by side with consumers to create a fairer, safer, and healthier world. For 80 years, CR has provided evidence-based product testing and ratings, rigorous research, hard-hitting investigative journalism, public education, and steadfast policy action on behalf of consumers’ interests. Unconstrained by advertising or other commercial influences, CR has exposed landmark public health and safety issues and strives to be a catalyst for pro-consumer changes in the marketplace. From championing responsible auto safety standards, to winning food and water protections, to enhancing healthcare quality, to fighting back against predatory lenders in the financial markets, Consumer Reports has always been on the front lines, raising the voices of consumers.
© 2016 Consumer Reports. The material above is intended for legitimate news entities only; it may not be used for advertising or promotional purposes. Consumer Reports® is an expert, independent, nonprofit organization whose mission is to work side by side with consumers to create a fairer, safer, and healthier world. We accept no advertising and pay for all the products we test. We are not beholden to any commercial interest. Our income is derived from the sale of Consumer Reports® magazine, ConsumerReports.org® and our other publications and information products, services, fees, and noncommercial contributions and grants. Our Ratings and reports are intended solely for the use of our readers. Neither the Ratings nor the reports may be used in advertising or for any other commercial purpose without our prior written permission. Consumer Reports will take all steps open to it to prevent unauthorized commercial use of its content and trademarks.