Panel airs concerns over deal

CARSON CITY — A U.S. House panel has raised several concerns about UnitedHealth Group’s pending $2.6 billion purchase of Sierra Health Services, Nevada’s largest health insurer.

In a letter to the federal Justice Department, the chairwoman of the House Committee on Small Business said the deal, if approved by the agency, could lead to “lower service, poorer quality and reduced access to health care.”

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 “to the point where it is below competitive levels.”

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.

“If the DOJ fails to take adequate steps to ensure the marketplace remains competitive in Nevada, a dangerous precedent will be set for evaluating future health insurance mergers across the nation,” Velazquez added.

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.

UnitedHealth spokesman Tyler Mason has disputed the percentages mentioned by Velazquez, saying the market share of the combined companies would be only 28 percent statewide and 33 percent in the Las Vegas area.

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.

Sierra Health spokesman Peter O’Neill has said discussions involving Sierra, UnitedHealth and the Justice Department are likely to continue for several weeks. He also said the companies are cooperating with the Nevada attorney general’s requests for information.

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.

While Nevada’s insurance commissioner has approved the deal, Cortez Masto could go to state or federal court if she determines there’s an antitrust violation.

Conditions imposed by state Insurance Commissioner Alice Molasky-Arman include 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 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.