Insurers criticize deal’s foes for ‘fiction’

Wednesday, Aug. 1, 2007 | 7:15 a.m.

Opposition to the proposed merger of Sierra Health Services by UnitedHealth Group - which would be the largest health care insurance merger in Nevada history - has been growing since the deal was announced in March.

Critics of the merger, which would affect about 630,000 Nevadans, say it would create an unprecedented monopoly, giving United the leverage to decrease reimbursements to doctors and increase costs borne by patients and business owners. Supporters say customers would benefit by the efficiencies of scale, connection to a national network of providers and Sierra Health's ongoing commitment to service.

A $2.6 billion deal hangs in the balance, so in addition to pressing their arguments in testimony at public hearings, the two insurers have tried to make their case in literature distributed at the meetings. Their strategy: to counteract the arguments, or "fiction , " put forward by critics of the merger with the "facts" from the point of view of the two companies.

Some of the issues raised by the compan ies delve into gray, speculative areas or are a matter of semantics.

For instance, United says the deal itself will not cause an increase in premiums, even though the constantly rising cost of health care could cause the company to pass increased costs on to consumers.

And indeed, the merger may not, in and of itself, lead directly to an increase in premiums.

But it would, as critics say, give United unprecedented leverage with health care providers, consumers and business owners, should the company want to increase its profits.

The Nevada attorney general's office, which has not formally weighed in on the deal, has cautioned that it "may result in the most concentrated insurance market in the country."

These antitrust concerns are the thrust of an investigation into the merger by the Justice Department, and are a consideration for the Nevada insurance commissioner, who must also approve the deal.

Here are samples of the companies' claims, each followed by a bit of context.

The companies say in their literature that the merger will "not monopolize Medicare programs in the state. Medicare Advantage plans represent only 33 percent of the total Medicare population in Nevada. Individuals eligible for Medicare have a choice."

A bit of context: United and Sierra Health are the only two companies that offer Medicare HMO plans in Clark County, so about 73,000 senior citizens would have no HMO choice if the merger is approved. United would take over Sierra Health's stake, giving it 100 percent of the market in Clark County. United would hold about 95 percent of the statewide Medicare HMO market.

The companies say opponents of the merger wrongly suggest Medicaid programs are in jeopardy because Sierra Health might terminate its contract with Medicaid after the merger. There is no intention to terminate Sierra's contract with Nevada Medicaid, the companies say.

A bit of context: Although Sierra Health has the contract, United has shown no interest in it, according to the attorney general's office. If the merger is approved , United could terminate Sierra Health's Medicaid contract, and the re established rates would likely be higher, the attorney general's office said.

The companies say it is fiction to suggest United will dominate the commercial market for health insurance after the merger. A combined United and Sierra Health would have a 28 percent market share in the Nevada health care market, and a 35 percent market share in Las Vegas.

A bit of context: Proponents and opponents come from a fundamentally different starting point when it comes to whether health maintenance organization markets should be considered separate from preferred provider organization networks, and ultimately the regulators will have to make that decision. But the attorney general's office says many consumers rely on HMOs, and United, post-merger, would control 95 percent of the HMO market in Clark County.

The companies say critics are wrong to suggest Sierra Health will be gutted by United and moved someplace else. United knows that Sierra Health is a valuable asset "as is" and the company is retaining the buildings, corporate structure and senior management team to run the company.

A bit of context: After the merger, Sierra Health executives would answer to United.