M&A: AMA tries to scupper insurance company takeover

Citing what the AMA calls "compelling evidence" William G. Plested, M.D., AMA immediate past president, told Nevada regulators that unchecked consolidation and concentration in the Nevada health insurance market endangers the competitive process and threatens health care quality.

"High-quality medical care is only possible if Nevada acts to protect a fully dynamic and competitive health care market," said Dr. Plested. "If this merger is not blocked, health care in Nevada will be controlled by a Minnesota-based company with a clear track record of placing profits over patient care, a lessened sensitivity to the local health care needs, and a selective sense of accountability to state and local regulators."

The proposed takeover would allow UnitedHealth Group to create a mega-plan with an unprecedented statewide stranglehold on the health insurance market, the AMA claims. In the Las Vegas area alone, the AMA estimates that UnitedHealth would control 95 percent of the HMO market. "Without any significant competition, UnitedHealth would be free to dictate unreasonable terms that would hurt the local quality of care," says the AMA in a media release.

In support of this claim, Dr. Plested presented an analysis of the experience of California's patients, physicians and employers after Anthem bought out WellPoint and its subsidiary Blue Cross of California. In the first year following the merger, Blue Cross of California, the state's largest for-profit health insurer, increased premiums faster than any other health insurer, and reduced its spending on medical care to less than 79 percent of the premium dollar, he said.

"It is entirely predictable that patients, physicians and employers of Nevada will experience a similar single-minded focus on profits as UnitedHealth will wield a dramatically greater market share than that of Blue Cross of California," said Dr. Plested.

According to the AMA, UnitedHealth has been unable to produce evidence to support its claim that competition without competitors would guarantee greater efficiency and lower health care costs. To the contrary, the AMA claims, economic studies show that it is very difficult to achieve long term efficiencies in mergers involving large HMO health plans.

BISfaculty presents Mergers and Takeovers in the Financial Services Industry in Hong Kong on 2 / 3 October 2007. Details here