Mumble, mumble: We don’t want a merger

Tuesday, June 26, 2007 | 7:19 a.m.

Insurance brokers opposed to the proposed merger between national behemoth UnitedHealth Group and Sierra Health Services say that the takeover will decrease competition and raise premium rates , and that public officials should speak out against the acquisition.

The brokers themselves are staying silent - or at least are unwilling to publicly stand behind their criticism of the pending merger - because they fear retribution from United or Sierra Health, which insures about 620,000 Southern Nevadans.

"If they're the only game in town I don't want them saying they don't want me selling their products," said one of nine brokers who spoke to the Sun in opposition to the deal. "They can un appoint whoever they want."

All nine brokers spoke on the condition that they remain anonymous. Two other brokers contacted by the Sun expressed support for the merger, and both were happy to give their names.

Sierra Health spokesman Peter O'Neill questioned the character of any broker who would speak anonymously against the deal.

It's "utter, complete nonsense" that any brokers would be cut off from the insurance companies for speaking against the consolidation, O'Neill said.

Tyler Mason, a spokesman for United, said it would not be in the company's best interests to stop working with any brokers. United's small-business policies are sold almost exclusively through brokers, he said, and they play an important role connecting the company to consumers.

The proposed merger, announced in March, could be completed by year's end pending the approval of the U.S. Justice Department and the Nevada insurance commissioner. Both are investigating the proposal because of antitrust concerns.

Such scrutiny by the Federal Trade Commission or the Justice Department occurred in only 3 percent of the 1,695 reported mergers in 2005, the most recent year for which statistics are available.

United, which insures about 70 million Americans, would take over Sierra Health and its subsidiary, Health Plan of Nevada, which insure more Nevadans than any other company.

The acquisition would give United an enormous share of the commercial health maintenance organization market, increasing its stake to 80 percent statewide and 95 percent in Clark County, according to government figures.

The company's share of the Medicare HMO market, which provides services for senior citizens and the disabled, would be 95 percent in Nevada and 100 percent in Clark County. Its combined HMO and preferred provider organization markets in Clark County would reach 56 percent.

"What scares ... me is that it takes away competition," one broker said. "Once the paperwork is all stamped, what's to stop United from raising rates like they did everywhere else?"

Brokers, whether for or against the merger, have a vested interest in the proposed merger. United pays lower commissions than Sierra Health, they said. And some said if the trend of insurance company mergers continues, it may reduce the need for brokers to sort through various policies.

The brokers criticizing the merger acknowledged their interest, but said their primary concern is for consumers.

Several critics said United drastically increased rates for small-business groups - companies with two to 50 employees - after it took over PacifiCare in 2005. One broker provided eight PacifiCare renewal statements he gave to small-business owners, showing cost increases of 17 percent to 65 percent. As soon as United started calling the shots with PacifiCare there was a 25 percent overall base increase in small-business policies, the broker said.

Another broker said United will become the "Mother Ship, dictating prices and products," reducing the number of choices to the community.

United spokesman Mason said premiums will not be raised as a direct result of the merger, but will likely continue to increase as health care costs rise.

Consumer choice is likely to be improved by the deal, Mason said, noting that when companies merge, they continue to offer the same plans and bring more products to businesses.

Gregg Dennis, president of IIS Benefits, said some of his colleagues resent the proposed merger because Sierra Health and HPN provide outstanding customer service. That's going to be lost when United takes over, making Las Vegas like most markets across the country, Dennis said.

Two brokers spoke publicly in favor of the acquisition at a recent insurance commission meeting. And Dennis was one of the two brokers contacted at random by the Sun who favors the merger. He said Sierra Health already had a monopoly that stifled competition. Now that Sierra Health is being acquired, Cigna and Aetna, two of the nation's largest carriers, are increasing their stake in Las Vegas, he said.

One broker critical of the deal said he was extremely frustrated that Gov. Jim Gibbons has been the only public official to raise any red flags about the deal.

"If you're really concerned about the status quo of the cost of health care in the state of Nevada, you can't ignore this," the broker said.