NU Online News Service, July 24, 2004, 10:03 p.m. EDT — California Insurance Commissioner John Garamendi has rejected efforts by Anthem Inc., Indianapolis, to acquire control of the California health insurance operations of WellPoint Health Networks Inc., Thousand Oaks, Calif., through a merger with WellPoint.[@@]

Some consumer advocates in California say the deal would trigger to huge payments to WellPoint executives and could lead to stiff health coverage rate increases and other problems for California consumers.

Anthem and WellPoint, 2 large Blue Cross and Blue Shield plan operators, argue that the deal would help them create a bigger, more efficient, multiregional carrier that would have an easier time getting doctors and hospitals to offer it low rates. The companies also say they have agreed to invest heavily in public health initiatives and that 21 top Anthem and WellPoint executives have agreed to give up $100 million in deal-related compensation to allay critics’ complaints about big executive compensation packages.

Garamendi, who has jurisdiction only over WellPoint’s insurance units and not over its larger health maintenance organization operations, has sided with the consumer advocates. “This is one lousy, bad deal for policyholders,” Garamendi said Friday during a teleconference held to announce his decision.

California HMO regulators and insurance regulators in other states have approved the Anthem-WellPoint deal.

Anthem and WellPoint say they are reviewing their options.