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Garamendi Lets Anthem Buy WellPoint Insurance Unit

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Anthem Inc., Indianapolis, has received permission from a key regulator to proceed with its $16 billion acquisition of a major unit of WellPoint Health Networks Inc., Thousand Oaks, Calif.[@@]

California Insurance Commissioner John Garamendi has given Anthem permission to take control of WellPoint’s Blue Cross Life & Health subsidiary.

Blue Cross Life, one of WellPoint’s biggest subsidiaries, writes health insurance for WellPoint in California.

Another, separately regulated WellPoint unit issues health maintenance organization coverage.

Anthem shareholders, WellPoint shareholders, California HMO regulators and other regulators already have approved the deal.

In theory, WellPoint could have sold Blue Cross Life before consummating the Anthem deal, but the companies have treated Garamendi’s objections to the Blue Cross Life acquisition as a major stumbling block.

Garamendi complained in July that the Anthem/WellPoint deal could hurt the quality of health coverage in California and lead to big rate increases.

Anthem now has agreed to many new conditions, Garamendi says in a statement explaining his move to approve the deal.

Anthem has agreed to spend at least $150 million extra on investments in health infrastructure and contributions to nurse training programs and health care clinics for the poor.

Anthem also has agreed to spend at least $25 million on a care quality improvement program.

Anthem has reaffirmed earlier commitments to invest another $100 million in California health initiatives and contribute $15 million to children’s health programs.

“I continue to have misgivings about the consolidation of health insurance companies,” Garamendi says. “But those concerns are beyond the normal scope of my review. I can only judge this transaction in comparison to the status quo.”