Opponents of health care takeover come out swinging in Round 2

By Marshall Allen (contact)

Sunday, July 29, 2007 | 7:02 a.m.

A second round of hearings about the proposed takeover of Sierra Health Services by UnitedHealth Group, the nation's largest health insurer, hasn't done any favors for the companies.

With the additional hearings, urged by Gov. Jim Gibbons, the two insurers are being pummeled by a growing number of opponents to the deal who hadn't previously marshaled their forces.

The initial one-day hearing was held June 14, with takeover proponents saying Nevada would benefit from the efficienc ies of scale and a connection to a national network of providers while maintaining Sierra's commitment to the community and quality service.

Critics have argued that the acquisition would monopolize the market, driving up premiums, lowering reimbursements to doctors and setting a national precedent for consolidation .

Gibbons on Friday sat quietly in the front row during a hearing in Las Vegas conducted by Pam Mackay, the deputy insurance commissioner in Las Vegas.

Nevada Insurance Commissioner Alice Molasky-Arman, who will decide whether to approve the takeover, is gathering testimony from consumers, medical providers and others. The acquisition also needs approval from the U.S. Department of Justice, which is in the midst of investigating it for possible antitrust concerns.

Sierra insures about 630,000 people, most of them in Clark County. The Nevada attorney general's office has determined the $2.6 billion acquisition could adversely affect consumers because it would consolidate the market, opening the door for UnitedHealth to raise premiums and decrease reimbursements to providers.

UnitedHealth would hold 96 percent of the contracts for 75,000 people in the Medicare HMO market, the attorney general's office noted, and the monopoly could increase costs to Nevada 's Medicaid program.

The proposed takeover was announced in March and was first publicly aired in June before Molasky-Arman. A smattering of opponents spoke against the deal then.

At that hearing, Gibbons called for more public discussion. He did not state his position on the issue.

The Republican governor traditionally favors business interests, so some observers have thought it odd he would slow the takeover process and open the door for continued criticism of the proposal.

But Gibbons is a friend of doctors, and the American Medical Association and Clark County Medical Society, doctor advocacy groups, stridently oppose the acquisition because it could drive down reimbursement rates. Physicians were big donors to a legal defense fund Gibbons created during the 2006 election.

Gibbons' call for additional hearings shouldn't be interpreted as opposition, said his press secretary , Melissa Subbotin.

"The governor simply wants people to be able to voice their concerns or support of the merger," she said.

Democrats who have crusaded for better health care in Nevada were late in joining the ranks of those questioning the takeover. Assemblywomen Barbara Buckley, D-Las Vegas, and Sheila Leslie, D-Reno, spoke at the hearings last week, cautioning the commissioner to carefully consider the takeover.

Buckley and Leslie said they hadn't spoken up previously because they were consumed by the legislative session, which ended in early June.

"After a legislative session, I can barely function," Leslie said. "I had to go back to work."

Leslie credited Gibbons for slowing the process so the two Democrats could highlight problems with the takeover.

Jon Bunker, Sierra's president and chief operating officer, made an impassioned plea Friday in favor of the takeover and said he was offended that critics of the deal were disparaging UnitedHealth, which has been fined in other states for violating insurance regulations.

"It pains me when I hear characterizations of these people as less than above board," Bunker said.

He assured the deputy commissioner that he would continue in his role with Sierra, and that the "legacy we began will continue."

Bunker, however, would answer to UnitedHealth executives if the deal went through.

Bobbette Bond, government and community affairs coordinator for the Culinary Health Fund, was among those who entered the takeover debate late in the game because of the continued hearings.

"We've moved from a position of concern about the merger, to serious concern, to opposition to the merger," Bond testified at Friday's hearing.

The self-insured Culinary Health Fund cares for about 120,000 union workers in Las Vegas, and a UnitedHealth monopoly could drive down reimbursements for doctors and hospitals, which would increase other insurers ' costs , Bond said.

She said the culinary health fund was not going to weigh in , but then they saw that dissent from those who do business with Sierra was being suppressed for fear of retribution. She noted that doctors have spoken as a group, but not individually, and the American Hospital Association has challenged the takeover, but local hospitals have not .

"We have just been very concerned by the lack of organized spokespersons," Bond said.

Another takeover critic who emerged last week is antitrust attorney David Balto, who came from Washington , D.C., to object to the acquisition on behalf of two national consumer groups.

"The decision here is going to reverberate throughout the nation," said Balto, who has worked for the Federal Trade Commission and the Justice Department. "It would set a green light for insurance companies to merge to monopoly, to buy up all their rivals."

Monopolizing the health insurance market is a recipe for higher premiums and lower quality care, Balto said.

Friday's hearing concluded the testimony before the insurance commissioner. Additional written comments about the takeover may be filed with the commissioner's office until Aug. 3.