UnitedHealth Group, PacifiCare Health Systems CEOs Defend Planned Merger

The CEOs of UnitedHealth Group and PacifiCare Health Systems on Friday said that a merger of the companies would increase competition among health insurers and improve service to employers, the Los Angeles Times reports (Vrana, Los Angeles Times, 7/9). Minnesota-based UnitedHealth on Wednesday announced plans to acquire California-based PacifiCare for $9.2 billion in cash, stock and assumed debt.

The acquisition, which requires shareholder and regulatory approval, would provide UnitedHealth with access to the 716,000 PacifiCare members enrolled in Medicare plans and the 2.5 million members enrolled in commercial plans in California, Washington state, Oregon and Nevada. The acquisition would increase the membership of UnitedHealth, the second-largest health insurer in the nation, to 25 million.

Opponents of the planned acquisition have said that previous mergers of large health insurers did not provide savings for consumers (California Healthline, 7/8). UnitedHealth CEO William McGuire said that, although such concerns "are legitimate," the acquisition will increase the ability of the company to compete with other large health insurers, such as Indiana-based WellPoint, through access to national resources and advanced technology.

In addition, McGuire said that he also hopes to expand business with small and medium-sized employers. He said, "This very much fits into our agenda to try to bring better health care services to different constituents and do it in a way that is unbounded by geography and other traditional restraints."

McGuire also said that the acquisition would address problems with the U.S. health care system through the use of technology to reduce costs and expanded efforts to track physician performance and manage chronic diseases.

PacifiCare CEO Howard Phanstiel added, "I'm not doing this to get money -- I'm doing this to make PacifiCare a more responsive company, to give it access to the best technology, to be a more viable competitor three or four years down the road" (Los Angeles Times, 7/9).