State Insurance Commissioner Thomas Sullivan today approved UnitedHealthcare‘s acquisition of Health Net, saying the deal will improve consumer choice in Connecticut.
UnitedHealthcare agreed in July to pay about $510 million to buy Health Net’s northeastern licensed subsidiaries, which have 578,000 members in Connecticut, New York and New Jersey.
Under the deal, UnitedHealth agreed to purchase the rights from Health Net to assume its commercial members as they renew coverage.
UnitedHealth said it also will pay Health Net $60 million for its Medicare and Medicaid businesses.
In a company statement UnitedHealth said it will “work to ensure a smooth transition process for members, physicians, hospitals, and other health care professionals.”
Several physician and consumer advocacy groups had raised concerns about the deal saying that it will lead to further consolidation in the Connecticut market, creating an “anticompetitive effect.”
Those groups also raised concerns that the deal will allow UnitedHealth to “cherry pick,” Health Net customers that they offer coverage to, since they are only proposing to buy renewal rights from Health Net.
Connecticut State Medical Society President Kathleen LaVorgna, said in a statement today that her organization doesn’t “see any inherent benefit for patients in this acquisition.”
“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,” LaVorgna said.
The state medical society said it might appeal the decision in state court.
Meanwhile, state Attorney General Richard Blumenthal said today he is investigating the acquisition on antitrust grounds.
Blumenthal said his office is gathering information about the deal and has asked for a meeting with representatives of both companies.
“One of our concerns,” Blumenthal said in a statement today, “is whether the merger will cause excessive concentration in some segments of the health insurance market and thereby unlawfully restrain competition.”
But in his decision, Sullivan said “the approval of this transaction strengthens, not weakens, consumer choice and security.”
“A year ago, Health Net announced it was initiating a strategic review of its Northeast business options, including leaving the state,” Sullivan said. “If Health Net did not partner with another company, Heath 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.”
Sullivan said his department will continue its strong regulatory oversight over Health Net during the transition period, and that if Health Net policyholders are not happy with either the level of coverage or price of the products offered through UnitedHealthcare, “they are free to choose any other product offered by any licensed insurance carrier.”
Â
Â
Â
Â
