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United Healthcare – Pacificare merger nears completion

John Garamendi, Insurance Commissioner of California, has approved the merger of United HealthGroup and Pacificare, removing perhaps the biggest obstacle to the deal. The combination, which will have 26 million members, has now been OK’ed in seven of the ten necessary states, with approvals from Colorado, Texas, Washington and the Feds still required to complete the process.
UHG agreed to concessions including providing $200 million for investments and $50 million in direct care for low-income California residents. This amount paralleled the value of the bonuses and payouts for Pacificare execs triggered by the deal’s execution.
With California approval now completed, it is highly likely the deal will proceed. Garamendi’s action was deemed critical to the merger, as he had previously delayed the Anthem-Wellpoint deal for several months over concerns about the impact on his state’s residents.
Amidst all the politicking and sound bites, one thing is clear. The inexorable movement of the health insurance industry to oligopoly status continues. Next up – perhaps Coventry or one of the few state Blues Plans still independent?
What does this mean for you?
Fewer plans, stronger negotiating positions with providers, fewer options for employers, but brutal competition among the survivors will continue.

Joe Paduda is the principal of Health Strategy Associates




A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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