Kaiser Permanente acquisition of Group Health Cooperative formalizes decades of partnership

Kaiser Permanente will acquire Seattle-based Group Health Cooperative, adding Group Health’s 590,000 members to its 10 million enrollees. For 20 years, the two non-profit health insurance providers have allowed members of each’s plans to receive care while visiting the other’s service areas; they have also collaborated on best clinical practices, health care policies, and non-profit innovations. Neither company has immediate plans to change current coverage or care options. In a letter to members, Group Health announced plans to create a new Group Health Community Foundation as part of the acquisition deal.

Kaiser Permanente is based in Oakland, California, and nearly 80 percent of its 10.2 million members are located in California; the company runs hospitals, physician groups, and an HMO in eight total states and the District of Columbia. Group Health is located in Seattle, with members in Washington and Idaho. The combined company will service communities along the West Coast from San Diego to Seattle. The agreement is subject to the approval of Group Health’s voting membership and regulatory approval.

This is the latest in a nationwide trend of health insurance provider mergers, with companies looking to minimize costs due to the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The ACA transformed the health insurance industry both by expanding Medicaid in many states and by requiring millions of Americans to purchase private health insurance through the exchanges (see A sign of the times, mergers demonstrate change in government’s health care role, Health Law Daily, August 26, 2015). The largest merger announced is between Humana Inc. and Aetna Inc. (see First post-ACA mega merger moves forward, Health Law Daily, October 20, 2015), with antitrust concerns being raised as large insurers get larger. Washington State Insurance Commissioner Mike Kriedler promised to examine the proposed deal “closely,” prioritizing the effect of the acquisition on competition and consumer choice in the state.