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Activist Group Blasts PacifiCare Deal

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The Foundation for Taxpayer and Consumer Rights is calling for California regulators to put strict limits on efforts by UnitedHealth Group Inc. to acquire PacifiCare Health Systems Inc.[@@]

UnitedHealth, Minnetonka, Minn., has agreed to pay $8.1 billion for PacifiCare, Cypress, Calif., a managed care company that provides or administers health coverage for 3.4 million people. UnitedHealth has said it is particularly interested in PacifiCare’s Medicare managed care operations.

The Foundation for Taxpayer and Consumer Rights, a group that lobbied against approval of the recently completed acquisition of WellPoint Health Systems Inc., Thousand Oaks, Calif., by Anthem Inc., Indianapolis, is asking regulators to require that UnitedHealth keep PacifiCare’s $374 million in excess reserves in California.

Before PacifiCare is acquired, it should pay the excess premiums back to health plan enrollees or put the reserves in trust to insure California residents who have trouble paying for health coverage, the foundation says.

The foundation also wants state regulators to limit executive bonuses, to protect patients against new restrictions on access to prescription drugs and provider networks, and to reserve the right to deny any unfair rate that UnitedHealth/PacifiCare might try to impose on California residents.

The foundation notes that PacifiCare executives could receive $230 million in bonuses if the UnitedHealth deal goes through.

Combining that $230 million with the $374 million in excess company reserves could provide enough cash to pay for health coverage for 200,000 of California’s 6.5 million uninsured residents for an entire year, the foundation says.

The foundation also raises questions about whether UnitedHealth would keep PacifiCare’s California managed care operations or if it would sell or shut down those operations and focus on using PacifiCare’s Medicare operations and other operations doing business outside California.


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