UnitedHealth Group Plan To Acquire PacifiCare Health Systems Might Face Problems in California
The planned acquisition of PacifiCare Health Systems by UnitedHealth Group likely will "draw close scrutiny in California," where some have raised concerns that the agreement will not benefit consumers, the St. Paul Pioneer Press reports (Forster, St. Paul Pioneer Press, 7/8).
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 (California Healthline, 7/7).
According to the Pioneer Press, California regulators likely will "focus on access to quality health care" rather than antitrust issues. Insurance Commissioner John Garamendi said, "My department has established a very clear position on health care industry consolidations and the effect that they may have on consumers" (St. Paul Pioneer Press, 7/8).
According to UnitedHealth and PacifiCare officials, the acquisition would benefit consumers through the expansion of the network of physicians and hospitals.
Opponents of the planned acquisition said that previous mergers of large health insurers did not provide savings for consumers. Jack Lewin, president of the California Medical Association, said, "There's no discernable benefit to the consumer for this. The benefit is to the companies and their shareholders."
Anthony Wright, executive director of Health Access California, said, "Because the health industry is dominated by only a few big players, there's less competitive force to try to bring down the price of health care" (Jablon, AP/Las Vegas Sun, 7/7).
In addition, Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights said that the acquisition would result in less choice for consumers, lower reimbursements for physicians and hospitals and more waste in the health care system unless regulators establish conditions for the agreement (St. Paul Pioneer Press, 7/8).
According to the AP/Sun, the acquisition "follows a consolidation trend among health insurers." The Goldman Sachs Group said that the acquisition would "increase pressure on other managed care companies ... to do further acquisitions to keep up with the expanding stakes for higher scale in the industry" (AP/Las Vegas Sun, 7/7).