Gibbons says health buyout needs closer look

Nevada Gov. Jim Gibbons has upped his efforts to attract additional regulatory scrutiny to UnitedHealth Group’s $2.6 billion acquisition of Sierra Health Services.

Gibbons sent a letter Friday to the U.S. Department of Justice and the consumer-protection unit of the Federal Trade Commission, asking both agencies to carefully consider how the buyout would affect Nevada’s insurance markets.

"I remain deeply concerned about the potential monopoly this merger could create, particularly for Medicare recipients and in the HMO market," Gibbons’ letter said.

Gibbons noted in the letter that he’s asked Nevada Attorney General Catherine Cortez Masto to "continue with a vigorous investigation" into the Sierra Health sale. He urged the Justice Department to consider the deal’s anticompetitive implications, and said he looked forward to the Federal Trade Commission’s participation in the review process.

"As officials charged with protecting the public, we need to ensure that health-care access in Nevada is not adversely impacted by any merger of insurance companies that may lessen competition," the letter said.

Gibbons wasn’t available Wednesday afternoon for further comment.

The Department of Justice has been examining the deal since the spring, when Minnesota-based UnitedHealth announced it wanted to acquire Las Vegas-based Sierra Health, the city’s largest managed-care insurer.

Tyler Mason, a spokesman for UnitedHealth, said he wasn’t sure if the Federal Trade Commission had already been looking into the buyout, but he said UnitedHealth would accommodate any new requests for details.

"I think it’s within the governor’s purview (to contact federal officials), and I think it’s consistent with his ongoing interest in this merger," Mason said. "We’ve all conducted ourselves in a transparent manner related to the merger, and we’ll continue to work with the governor and any additional parties he thinks we need to exchange information with."

Jenny Des Vaux Oakes, a spokeswoman for Sierra Health, said her company will also cooperate with any additional queries into the sale.

"We appreciate the governor’s continued interest in this issue, and we’re certain at the federal level that the matter will be thoroughly reviewed," Des Vaux Oakes said. "All input received will be carefully considered."

The deal would combine the state’s No. 1 and No. 3 insurers, giving them a combined customer base in Nevada of more than 800,000 enrollees. WellPoint Health Networks, the No. 2 insurer, has about 270,000 members in the Silver State.

The Justice Department issued a second request for information on May 16, asking for more details from Sierra Health and UnitedHealth about the deal and its effects on the market. But health-care analysts have said second requests from the department are common in the health-insurance realm, and don’t necessarily signal that federal antitrust regulators have substantial reservations about a merger.

The American Medical Association, the Service Employees International Union and the Nevada State Medical Association are among groups that have come out against the deal, saying it would give UnitedHealth, a major insurer with more than 70 million customers nationwide, nearly 100 percent of the state’s Medicare segment and 95 percent of the state’s fully insured HMO market.

Executives of Sierra Health and UnitedHealth have responded that those figures don’t consider competition in the broader market, which includes a large number of self-insured corporations, as well as PPO and point-of-service plans. The combined entity would have 28 percent of the market in commercial insurance for employers in Nevada and 18.9 percent of the statewide market in insurance for employers with two to 50 workers, executives have said.

Mason said he didn’t expect Gibbons’ outreach to federal regulators to substantially affect the buyout’s completion.

"We’re still reasonably confident that the deal should close by the end of the year," he said. "The entities (Gibbons is) talking to have been entities everyone has been communicating with for multiple months."

Insurance commissioners in Nevada, California and Arizona have approved the deal.

Nevada Insurance Commissioner Alice Molasky-Arman gave the buyout the nod on Aug. 27 after several hearings around the state.

Molasky-Arman placed several conditions on her approval, including prohibiting the companies from passing along merger costs to consumers in the form of higher premiums and slashed benefits, and requiring UnitedHealth to develop specific measures to reduce the number of uninsured in Nevada.

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