Insurers’ merger in good hands

Wednesday, Aug. 22, 2007 | 7:05 a.m.

A proposed $2.6 billion health insurance merger that would affect 630,000 Nevadans hangs in the balance, awaiting the decision of Nevada Insurance Commissioner Alice Molasky-Arman.

Molasky-Arman can approve, deny or place conditions on the deal , which would allow national behemoth UnitedHealth Group to take over homegrown insurance giant Sierra Health Services.

Observers who know the commissioner say she's certain to thoroughly examine the evidence for and against the merger and render a fair ruling. Her decision is expected by Monday.

But she will be criticized no matter what she decides, observers say.

Nevada state Sen. Randolph Townsend, R-Reno, has worked with Molasky-Arman in his position as chairman of the Commerce and Labor Committee. Calling this arguably the commissioner's biggest decision in her 12 years on the job, Townsend said he thinks she's likely to be "pilloried no matter what she does."

"My guess is both sides will complain they didn't get what they wanted," Townsend said.

United's proposed takeover of Sierra Health would monopolize certain segments of the health insurance market in Nevada. United would control 100 percent of the Medicare HMO market in Clark County and 95 percent statewide. United, post-merger, would control 95 percent of the HMO market in Clark County. The deal needs approval by the Justice Department, which is investigating its possible effect on market competition.

Critics of the merger say United's leverage would allow the company to increase costs borne by consumers and business owners, and lower its payment rates to medical providers. Proponents say United would introduce advanced technologies, add efficiencies of scale and connect Nevadans to a national network of providers.

Molasky-Arman has declined interviews until she makes her decision on the merger. But those who have worked with her on other matters said she takes a measured approach to big decisions and they trust her judgment.

"She's remarkably hard-working, thorough and open," Townsend said.

Lobbyist Lisa Foster, who represents Reno-based St. Mary's Health Plans and worked for Gov. Kenny Guinn, said Molasky-Arman is a model of how government regulators should interact with the industries they oversee. Guinn's office considered having her train other regulators, Foster said.

Foster pointed to Molasky-Arman's response to the medical malpractice crisis as an example of her leadership. In 2001, when medical malpractice insurance companies were exponentially raising rates for doctors or leaving the state, Molasky-Arman held hearings and determined this essential insurance was becoming unavailable to physicians. In 2002 she created the Medical Liability Association of Nevada to temporarily provide affordable malpractice insurance, allowing physicians to stay in Nevada.

The commissioner also is consumer-minded, Foster added, ensuring that Nevadans are protected while allowing the insurance market to stay strong enough to appeal to companies.

"That's a difficult balancing act," Foster said.

Larry Matheis, executive director of the Nevada State Medical Association, is an outspoken opponent of the Sierra Health-United merger but said he trusts Molasky-Arman to be fair in applying the law. The commissioner has been responsive when doctors have had trouble with patients or insurance companies , Matheis said.

Molasky-Arman knows Nevada insurance law better than anyone else , Matheis said. She started in 1976 as an insurance examiner before going to law school in 1988 and then returned to the insurance division as insurance counsel and hearing officer. She rose to the role of commissioner in 1995.

"She knows almost every section of the division because she's probably done it," Matheis said.

Scott Craigie, a lobbyist for the Nevada State Medical Association, described Molasky-Arman as an independently minded "umpire" whose tenure has been characterized by fact-finding and searching for common ground.

"I have no idea where she is going to go on this issue," Craigie said of the proposed merger. "But frankly, if there was any person who was going to make this decision, however it comes out, I would trust her to do it."