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AMA Asks Feds To Probe Health Deal

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The American Medical Association has asked the Justice Department to take a close look at efforts by UnitedHealth Group Inc. to acquire PacifiCare Health Systems Inc. through a merger. [@@]

In a letter to Attorney General Alberto Gonzales, AMA Executive Vice President Michael Maves says the effects of the recent merger of Anthem Inc., Indianapolis, and WellPoint Health Networks Inc., Thousand Oaks, Calif., show that the proposed UnitedHealth-PacifiCare merger will be a bad deal for the consumer.

“The market power resulting from such mergers redirects money away from patient care and into corporate profits,” Maves writes.

Maves asserts that most of the federal antitrust action in the health care field has been targeted at physicians. “The reality is that most physicians are in practices of 10 or fewer physicians,” Maves writes. “Therefore, physicians face a true David and Goliath battle when dealing with health insurers.”

Among the concerns about the prospective merger that Maves listed was what he termed “United’s single-minded focus on profits, that has resulted in 29 consecutive quarters of increased premiums.”

The savings that UnitedHealth, Minnetonka, Minn., reaps from mergers accrue to the company’s bottom line, not to customers or physicians, Maves writes.

Last week, UnitedHealth posted a 36% increase in second-quarter earnings.

“This was attributed to ‘membership increases and declining costs,’” Maves writes. “This is another indicator that United is very much focused on cutting what it pays for medical care.”

AMA spokesman Robert Mills says the Justice Department already has announced that it will look into antitrust aspects of the merger, just as it would look into the antitrust aspects of any other large merger.

In addition, regulators in Minnesota, UnitedHealth’s home state, and California, the home state of PacifiCare, Cypress, Calif., can consider antitrust issues.

California Insurance Commissioner John Garamendi says his department will apply the same close scrutiny the department has used in examinations of previous applications.


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