While state regulators have approved UnitedHealth Group's $2.6 billion purchase of Sierra Health Services Inc., Nevada's largest health insurer, the American Medical Association continued its fight against the deal during a congressional hearing Thursday.
The AMA's immediate past president, Dr. William Plested, asked the House Committee on Small Business to urge the federal Justice Department to block the purchase, saying it's part of a trend that will lead to a few big companies "that operate in the interest of shareholders rather than patients."
The Justice Department's approval is the last one needed for the deal to go through. Regulators in Nevada, California and Arizona already have endorsed the plan - although Nevada Attorney General Catherine Cortez Masto still could intervene.
Plested told the House committee that the United Health-Sierra deal will "drastically" reduce competition because United would end up with 80 percent of the HMO market in Nevada, and 94 percent of that market in the Las Vegas area, the state's population center.
Plested argued that the result could be a health insurer able to "raise prices, decrease compensation and reduce quality without fear of meaningful competitive market responses."
UnitedHealth spokesman Tyler Mason disputed Plested's percentages, saying the market share of the combined companies would be only 28 percent statewide and 33 percent in the Las Vegas area.
Mason also said that UnitedHealth and Sierra promised there would be no premium increases "as a direct result of this merger," and the goal is "to better serve consumers in Nevada."
He added that Aetna plans on more Nevada business - meaning more
competition, not less.
Sierra Health spokesman Peter O'Neill said discussions involving Sierra, UnitedHealth and the Justice Department are likely to continue "for the next several weeks." He also said the companies are cooperating with the Nevada attorney general's requests for information.
During hearings in Nevada, representatives of the two companies sought to reassure regulators that Las Vegas-based Sierra Health
would retain its own leadership and expand services without raising
While Nevada's insurance commissioner has approved the deal, Cortez Masto could go to state or federal court if she determines there's an antitrust violation.
Conditions imposed by state Insurance Commissioner Alice Molasky-Arman include a requirement that no acquisition costs be passed onto consumers or health care providers; and that premium costs and provider fees not be increased as a result of the deal.
The insurance commissioner also said local home office, management and employment should continue; and benefit plans shouldn't be scaled back.
Sierra Health has 310,000 members in employer-sponsored plans in Nevada and another 320,000 people in plans for retirees and government workers. The company posted 2006 profit of $140.5 million on revenue of $1.72 billion.
(Copyright 2007 by The Associated Press. All Rights Reserved.)