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Physicians Charge Health Insurer Merger Not In The Public Interest
Date:5/15/2008

Department of Justice's enforcement action in Sierra acquisition was inadequate and should be rejected

WASHINGTON, May 15 /PRNewswire-USNewswire/ -- The American Medical Association, Nevada State Medical Association and Clark County Medical Society today announced they have filed joint comments seeking to reject the final judgment proposed by the Department of Justice (DOJ) in the acquisition of Sierra Health Services by United Health Group.

The three physician organizations filed comments to the DOJ and the federal court in the District of Columbia under the Antitrust Procedures and Penalties Act (Tunney Act) because the DOJ's actions are seriously inadequate to protect high-quality medical care from the anti-competitive nature of this merger.

"The acquisition of Sierra by UnitedHealth creates an unprecedented level of market concentration in Southern Nevada," said AMA Immediate Past President William G. Plested, M.D. "The merger permanently transforms the health insurance market in Las Vegas, allowing UnitedHealth to acquire a 90 percent share of the health maintenance organization (HMO) market."

"After an 11-month investigation, the DOJ's modest response to the merger left several hundred thousand people in Nevada's fragile health care system vulnerable to a health insurer with a near-monopoly in the HMO insurance market," said Richard P. Seher, M.D., president of the Nevada State Medical Association. "Contrary to claims of greater efficiencies and lower costs, consolidation in the health insurance industry, in fact, has been shown to raise premiums and decreased patient access to care."

Physicians charge that the DOJ's limited enforcement action in the merger fails to protect Nevada from:

-- inadequate levels of service and quality;

-- higher patient insurance premiums; and

-- one-sided, coercive contractual provisions.

The physician organizations urged the court to critically scrutinize the DOJ's decision not to bring an enforcement action challenging the anti-competitive effects of the merger in Nevada's commercial health insurance market.

"The decision to approve the Sierra acquisition, despite the anti-competitive concerns in the Las Vegas market, was a step backward for the DOJ's enforcement actions," said Dr. Plested. "If the DOJ has changed its enforcement policy on health insurance mergers, it should disclose the reasons for those changes so that the court can determine whether the proposed final judgment is in the public's interest."

Citing the negative effects of consolidated market power, the DOJ in 2005 required significant divestiture in another UnitedHealth mega-merger involving PacifiCare. This meaningful action to protect high-quality medical care from dominant market power acquired by UnitedHealth stands in stark contrast to the DOJ's current actions in the Sierra buyout where the threat of an anti-competitive monopoly is much higher.

"The Department of Justice dropped the ball in protecting Nevada's health care system and that mistake should be reversed," said Dr. Seher. "In the interim, we are looking forward to working with the Nevada State Attorney General to implement the broader protections she has ordered as conditions of the merger."

Also filing Tunney Act comments today were the U.S. House of Representatives Committee on Small Business, Service Employees International Union Nevada and Clark County Commissioner Chris Giunchigliani.


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SOURCE American Medical Association
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