Wellpoint Agrees To Purchase Blue Cross Blue Shield of Wisconsin Subsidiary

Officials at California-based WellPoint Health Networks, one of the nation's largest health insurers, on June 3 announced that the company has agreed to purchase Milwaukee-based Cobalt, a subsidiary of Blue Cross Blue Shield of Wisconsin, for $906 million in cash and stock, the New York Times reports. The acquisition of 800,000-member Cobalt "fills out WellPoint's network in the Midwest" and will raise WellPoint membership in the region to 3.5 million; WellPoint has about 13.5 million members nationwide (Sorkin/Freudenheim, New York Times, 6/4). Leonard Schaeffer, chair and CEO of WellPoint, said that the acquisition will not affect Cobalt business practices. He added that WellPoint will not "interfere" in Cobalt negotiations with health care providers, promotional plans or product prices, Knight Ridder/Milwaukee Journal Sentinel reports (Manning, Knight Ridder/Milwaukee Journal Sentinel, 6/5). The acquisition, however, could "face resistance" from consumer advocacy groups and Wisconsin regulators -- similar to problems that WellPoint faced in an effort to purchase CareFirst Blue Cross Blue Shield, the Times reports (New York Times, 6/4). In March, Maryland Insurance Commissioner Steven Larsen rejected the $1.37 billion sale of CareFirst, the largest not-for-profit health insurer in the Washington, D.C., area, to WellPoint over concerns that the sale would not benefit the public (Kaiser Daily Health Policy Report, 3/6). However, analysts predict that the Cobalt acquisition "is likely to go through because Cobalt is a for-profit company and not subject to the same regulatory scrutiny" as CareFirst, the Los Angeles Times reports. Schaeffer said, "We are very enthusiastic about this opportunity. ... We don't anticipate any opposition. It's a very clean deal" (Vrana, Los Angeles Times, 6/5).