AMA opposes UnitedHealthdeal

Article by: David Phelps , Star Tribune
Updated: March 19, 2007 - 7:31 PM

The medical association called the insurer's move into Nevada "a blatant grab for dominant market power."

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The American Medical Association announced its opposition Monday to the pending merger between UnitedHealth Group Inc. and Sierra Health Services Inc. of Las Vegas.

In a letter to U.S. Attorney General Alberto Gonzales, the doctors' organization asked the U.S. Justice Department to block UnitedHealth's $2.6 billion purchase of Sierra on antitrust grounds.

"Federal authorities must not allow United's blatant grab for dominant market power," wrote AMA board member Dr. J. James Rohack. "Without threat of competition in Nevada, United will be free to raise premiums above market rates."

UnitedHealth called the AMA's opposition to the acquisition of Sierra misleading and narrow since it focused on the fully insured HMO market and "fails to include the numerous other competing insurance products" in the Nevada market.

"The combination of UnitedHealth and Sierra Health Services will provide the people of Nevada with the advantages of a full range of affordable services and access to a broader network of quality physicians and hospitals," the Minnetonka-based health insurer said in a statement.

The AMA said UnitedHealth would have 43 percent of Nevada's commercial health insurance market after acquiring Sierra, compared to its current 14 percent market share. In the Las Vegas market, the combined company's share would be 56 percent, compared with 18 percent now.

The AMA has a history of opposing mergers in the health care industry out of concern that a small number of large insurers is not good for physicians and patients.

The AMA also raised antitrust concerns before UnitedHealth acquired California-based PacifiCare a year ago. In that case, the Justice Department made UnitedHealth divest portions of PacifiCare's commercial health insurance business.

David Phelps • 612-673-7269 • dphelps@startribune.com