Connecticut AG Eyes UnitedHealthcare-Health Net Merger

While consideration of health care may be dominating the halls of Congress, state officials are reminding health insurers that the Feds don’t have a monopoly in regulation.

Connecticut Attorney General Richard Blumenthal has announced that his office is investigating the merger of UnitedHealthcare and Health Net Inc.

UnitedHealthcare agreed in July to pay approximately $510 million to buy Health Net’s northeastern licensed subsidiaries.  As part of the deal, UnitedHealthcare agreed to buy the rights from Health Net to acquire its commercial members as they renew their coverage.  The deal was recently approved  by Thomas Sullivan, the Connecticut State Insurance Commissioner.

Health Net provides health benefits to approximately 6.6 million individuals across the United States.  It serves 578,000 members in New York, New Jersey and Connecticut and it is estimated that Health Net’s northeast operations have generated $2.7 billion in revenues for 2009.  

UnitedHealthcare provides health care benefits to 25 million consumers and has contracts with 600,000 physicians and over 5,000 hospitals and 60,000 pharmacies throughout the United States.

Blumenthal released a statement that the deal could violate antitrust laws and that “one of our concerns is whether the merger will cause excessive concentration in some segments of the health insurance market and thereby unlawfully restrain competition.”

Consumer groups have voiced concern that the merger will allow UnitedHealthcare to cherry pick Health Net customers.  Kathleen LaVorgna, President of the Connecticut State Medical Society, said that her organization does not “see any inherent benefit for patients.”  She added, “we are concerned United can pick and choose which employers it wants to continue to do business with thus dropping patients who are more likely to be at risk of needing more medical services.”

Some officials, however, believe the acquisition is good for competition. Sullivan said the transaction that he approved “strengthens, not weakens, consumer choice and security.”  He explained that if Health Net left Connecticut without partnering with another company, “Health Net policyholders would have been left to secure replacement coverage on their own without the benefit of UnitedHealthcare’s commitment to offer each policyholder renewal coverage.”