Merger foes may get extra muscle

Marshall Allen and Tony Cook

Thursday, Dec. 13, 2007 | 7:23 a.m.

As a monumental merger that could create a health insurance monopoly in Las Vegas comes to a head, a powerful ally may be joining the coalition opposing the deal, adding intrigue and muscle to a fight that affects 630,000 Nevadans.

Clark County will be a latecomer to the fray if commissioners vote Tuesday to support the growing force opposing the merger between Sierra Health Services, the state's largest health insurer, and Minnesota-based UnitedHealth Group, the country's largest health insurance provider.

Sierra and United officials say the deal could close by month's end.

The commissioners will vote on whether to pay up to $20,000 to retain David Balto, a Washington, D.C., antitrust attorney working as a consultant to groups opposing the merger. Balto's current clients are the Clark County Medical Society, the Nevada State Medical Association and the American Medical Association - which represent doctors - and the Service Employees International Union Local 1107, which represents about 17,500 workers, most of them nurses.

Assuming the commissioners approve hiring Balto, the county's entry into the merger battle signals its interest in buying a seat at the table as the attorney lobbies for conditions the coalition wants placed on the deal.

Regulators in other states have required health insurance companies to divest portions of their market share and to provide subsidies to support uninsured patients, and have placed other conditions on mergers.

Balto has met with officials from the U.S. Justice Department and the Nevada attorney general's office to push for possible conditions, according to a source familiar with the discussions.

If the proposed merger is approved by the Justice Department and allowed by the attorney general's office, the coalition could file a lawsuit to block it, in which case Clark County could be a potent force for the opposition.

Clark County officials would not discuss any potential litigation Wednesday.

County Manager Virginia Valentine said the public has an interest in any detrimental effects the merger could have on University Medical Center, the county's only public hospital. Hiring Balto would include UMC in discussions about the merger, she said.

The county is entering the dispute late, Valentine said, because "we thought we could rely on others to represent us, but as the process moved forward we decided we really needed to be representing our interests ourselves."

Merger opponents say United would have a virtual monopoly in Clark County, where it would control 95 percent of the HMO market, stifling competition and consumer choice, and possibly cutting reimbursement payments to providers.

The two companies dispute opponents' market share numbers and instead combine the HMO and preferred provider plans in the county, which gives them a 35 percent stake.

The $2.6 billion merger was announced in March and has been approved - with few conditions to protect consumers in the long run - by Nevada Insurance Commissioner Alice Molasky-Arman.

Nevada Attorney General Catherine Cortez Masto said she was "troubled and disappointed" by the insurance commissioner's ruling, and her office could intervene if it's determined the proposed takeover of Sierra would hurt competition in Nevada.

The Justice Department has been closely investigating the antitrust implications of the merger since it was announced.

Sierra spokesman Peter O'Neill said Justice officials appear to be in the final stages of their investigation and have been meeting with company representatives in recent weeks.

O'Neill declined to comment on Clark County's possible involvement in the opposition movement. United spokesman Tyler Mason said the companies have been open throughout the merger process and would be happy to address any concerns Clark County officials might have.