The California Assembly is considering a bill that would require insurance companies receive state approval before they can merge or acquire other health plans.
The bill passed the Assembly Health Committee on Tuesday and was introduced in February, shortly after federal judges blocked the marriages of Anthem-Cigna and Aetna-Humana.
Currently, health plan mergers and acquisitions are approved by the California Insurance Commissioner Dave Jones, who has been outspoken about premium hikes by insurers.
The bill would allow the state's Department of Managed Health Care to approve any mergers or acquisitions of health plans that operate in the state, in addition to the insurance commissioner signoff. Under existing law, the Department of Managed Health Care provides licenses and regulates 95% of health plans in California. But the department isn't allowed to reject mergers or acquisitions.
The proposed law would require insurers apply for a license as a new health plan as part of the merger approval process. The Department of Managed Health Care would decide whether to approve that new license. \
The department would also have to hold public hearings on proposed mergers; provide customers and patients with data on the deal's impact to cost, quality and access to care; and determine if the insurer is of “reputable and responsible character.”
“Bigger can be better or it can be worse,” said Assembly Member Jim Wood, a Democrat and lead sponsor of the bill. “In the healthcare arena we need to encourage as many health plans as possible to ensure healthy competition and competitive pricing,”
California has a concentrated health care insurance market, and in some rural areas there are few plans available.
Recent mergers in the state include Blue Shield of California's $1.2 billion acquisition of Care1st Health Plan in 2015 as well as Centene's $6 billion purchase of Health Net.
Centene won state approval for the deal last March only after it agreed to several conditions including to keep Health Net's headquarters in California and to spend $340 million on measures that will improve community health and support the underserved.