As health-care companies try to balance increased charges by providers and resistance to those costs from companies paying for health insurance mergers like that of Anthem and WellPoint Health Partners of California are likely.

MORE...

However, such mergers often have initial costs, including severance pay for executive positions no longer needed in the combined company.

California's controversial insurance commissioner, John Garamendi, has blocked the Anthem-WellPoint merge on the grounds that the severance pay would cost California ratepayers.

The companies have sued and some legal experts expect them to win because Garamendi has overreached his authority.

Other California agencies approved the merger after the companies made concessions on displaced executives would be compensated.

Garamendi may have been emboldened by California Treasurer Phil Angelides and other members of the California Public Employees' Retirement System board who said they would lead a national campaign against lucrative severance packages triggered by mergers.

This is an issue that needs to be addressed. Executives engineer mergers and as part of the plan their own payouts costing the new company hundreds of millions of dollars.

The problem with the Anthem case is that Garamendi blocked the merger after his own staff helped negotiate a compromise on executive pay approved by the other state agencies involved.

There is no question Garamendi has the authority to block a merger that is not in the interest of providing quality health care in California.

To read entire Article Click here

Source: Palladium-Item