Las Vegas Sun

March 28, 2024

As clock ticks away, merger foes find hope

State approval of would-be union of health insurance giants expires this month

Members of a coalition opposed to a proposed merger between UnitedHealth Group and Sierra Health Services are finding hope in a rapidly approaching deadline imposed on the plan’s approval.

Nevada Insurance Commissioner Alice Molasky-Arman’s ruling in favor of the merger will expire Feb. 29 if the deal has not closed by then.

That date is taking on added significance by the day as the U.S. Justice Department’s approval process drags on. Officials of United and Sierra said for months they expected Justice to rule in its antitrust investigation and give the deal final regulatory approval by the end of 2007. Now they say they are hoping for a decision soon.

But even if Justice does approve, merger opponents hope state agencies will intervene.

Clark County Commission Chairman Rory Reid and Assembly Speaker Barbara Buckley are scheduled to speak against the $2.6 billion deal at a news conference today. The coalition members — which include doctors associations, the Service Employees International Union-Nevada and Clark County — say the merger would put unprecedented power in the hands of United, which in the past year has been fined for alleged regulatory violations in dozens of states, including Nevada.

Sierra Health is the largest health insurance company in the state. United is the largest in the nation.

The proposed merger is being scrutinized by regulators and has been widely criticized because United would inherit 630,000 Sierra patients, most of them in Clark County. The new United would control 100 percent of Nevada’s Medicare Health Maintenance Organization market, and in Las Vegas would reach unprecedented levels of market concentration, according to antitrust experts.

Critics say United will have enough market share to drive up premiums for consumers and lower reimbursement rates to doctors and hospitals, all to increase its profits.

They contend United cannot be trusted to make good on its promises to improve health care in Nevada and cite the company’s marred regulatory record as evidence. Last week, it was announced that United faces fines of up to $1.33 billion by California regulators for more than 130,000 alleged claims-handling violations. In September, regulators from 36 states joined to levy what could amount to $20 million in fines for some of the same reasons.

The fines stemmed from United’s clumsy merger with PacifiCare, and company officials have acknowledged that there were unexpected problems with handling claims. Problems of that kind would not exist here, company officials say, because United would not run the Nevada company’s claims-handling system.

Officials of Sierra and United say Nevadans would benefit from United’s national network of providers and excellent use of technology. They promise that Sierra will not be changed as a result of the merger, so Nevadans have nothing to worry about.

Larry Matheis, executive director of the Nevada State Medical Association, one of the organizations opposing the Sierra merger, said the recent fines validate what critics have been saying since the proposed deal was announced in March.

The concerns not only remain, but they are “more problematic now than they were a year ago,” Matheis said.

Today’s push by opponents appears to be aimed in part at Nevada Attorney General Catherine Cortez Masto. She has said she was “troubled and disappointed” by Molasky-Arman’s ruling, which did not impose conditions to protect consumers enrolled in HMOs.

The California insurance commissioner, for example, required United to pay $250 million toward health care for the poor when it took over PacifiCare in 2005. In the case of the proposed United-Sierra merger, no such conditions were required.

Officials from Cortez Masto’s office also are investigating the merger for antitrust concerns. In private meetings with the opponents, those officials have indicated a willingness to impose conditions on the companies that could include remuneration, through litigation if necessary, to offset potential negative effects of the merger, according to some health care insiders who attended the meetings.

Officials from the Nevada insurance commissioner’s office said they could not comment about what would happen if the approval deadline is missed. Sierra and United officials could not be reached for comment. Matheis said United could be granted an extension or even be forced to start the approval process over again.

“The commissioner would have the authority to reopen a new hearing as a new case because there have been so many changes in the landscape of what the merger included,” Matheis said.

Factors such as the multitude of fines against United were not known when the commissioner granted her approval, Matheis said, and should be taken into consideration.

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