Governor concerned about big health care merger in Nevada
November 16, 2007
Gov. Jim Gibbons has asked the federal Justice Department to resolve “widely varied” estimates of the market impact of UnitedHealth Group’s pending $2.6 billion purchase of Sierra Health Services Inc., Nevada’s largest health insurer.
In a letter to the agency, released Friday, Gibbons said the market analysis could require “a full and thorough audit and review, but it is my belief that such an investigation … is absolutely necessary to protect the interests of Nevadans.”
Gibbons said he’s concerned that the deal “could prove to be less than advantageous to Nevada consumers because of the overwhelming HMO and Medicare market share the UnitedHealth Group will control in our state,” Gibbons said.
Gibbons’ letter followed recent concerns voiced by the chairwoman of the House Committee on Small Business about the deal. Rep. Nydia Velazquez, D-N.Y., said a combined United-Sierra would have an overwhelming market share in Nevada and that could lead to reduced compensation for health care providers.
Velazquez said United would go from a 12 percent share of the HMO market in Nevada to an 80 percent share, and in the Las Vegas area from a 14 percent share to 94 percent.
But UnitedHealth spokesman Tyler Mason disputed the percentages, saying the market share of the combined companies would be only 28 percent statewide and 33 percent in the Las Vegas area.
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Mason also has said that UnitedHealth and Sierra promised there would be no premium increases “as a direct result” of the deal.” He also said Aetna plans on more Nevada business ” meaning more competition, not less.
The Justice Department’s approval is the last one needed for the deal to go through. Regulators in Nevada, California and Arizona already have endorsed the plan ” although Nevada Attorney General Catherine Cortez Masto still could intervene.
During hearings in Nevada, representatives of the two companies sought to reassure regulators that Las Vegas-based Sierra Health would retain its own leadership and expand services without raising rates.
In endorsing the deal, state Insurance Commissioner Alice Molasky-Arman included a requirement that no acquisition costs be passed onto consumers or health care providers; and that premium costs and provider fees not be increased as a result of the deal.
The insurance commissioner also said local home office, management and employment should continue; and benefit plans shouldn’t be scaled back.
Sierra Health has 310,000 members in employer-sponsored plans in Nevada and another 320,000 people in plans for retirees and government workers. The company posted 2006 profit of $140.5 million on revenue of $1.72 billion.
On the Net:
UnitedHealth Group: http://www.unitedhealthgroup.com/
Sierra Health Services Inc: http://www.sierrahealth.com/