The American Medical Association called on the U.S. Justice Department to thoroughly investigate UnitedHealth Group's proposed acquisition of PacifiCare Health Systems. In a July 21 letter to Attorney General Alberto Gonzales, AMA officials challenged UnitedHealth's "single-minded focus on profits" and voiced "strong opposition" to the health insurance industry's continued consolidation, arguing that it has squeezed providers and would raise healthcare costs while reducing the quality of care.
Earlier this month, Minnetonka, Minn.-based UnitedHealth agreed to acquire 3.3 million-member PacifiCare, Cypress, Calif., in a $9.2 billion deal that would create a company with roughly $33.5 billion in assets and 26.2 million members nationwide. If the deal closes, some 55 million Americans, or more than one-fifth of the nation's insured population, would be covered by one of just two publicly traded companies, UnitedHealth or WellPoint.
"It is time for the federal government to take a hard look at the anticompetitive consequences of large health insurers gaining monopolistic or oligopolistic control of market share by devouring their competitors," according to the AMA's letter. "Health insurance premiums across the country continue to rise, and United is posting exorbitant profits. This raises a serious question about whether this merger provides any benefit to consumers or is primarily for the benefit of shareholders and highly paid executives."
Last year, the AMA and other groups called on the Federal Trade Commission to investigate the $14.6 billion merger of Anthem and WellPoint Health Networks. That deal closed Nov. 30, 2004, creating the largest U.S. health insurer with 28 million members.