Colorado Insurance Commissioner David Rivera approved the proposed $9.2 billion merger of UnitedHealth Group, Minnetonka, Minn., and PacifiCare Health Systems, Cypress, Calif., after the health insurers pledged $7.5 million to improve healthcare for the state's rural and underserved communities. The companies also agreed not to pass along merger-related costs to Colorado consumers and to improve claims processing and communication with physicians. Colorado was the last of 10 states required to approve the merger, according to the Colorado Division of Insurance. On Monday, California Insurance Commissioner John Garamendi approved the merger after securing $263.7 million in concessions for the state. Washington state approved the merger Tuesday without conditions.
Meanwhile, UnitedHealth spokesman Mark Lindsay said the companies would make "whatever changes are necessary" to obtain Justice Department approval of the deal. In a civil lawsuit filed Tuesday in U.S. District Court, Washington, the department said the merger would have anticompetitive effects if the companies did not divest portions of PacifiCare's commercial health insurance business in Arizona and Colorado. Specifically, the department asked that the insurers sell off all of PacifiCare's small-group business in Tucson, Ariz., and shed percentages of the company's commercial membership in Tucson and Boulder, Colo. The department also asked that UnitedHealth modify and after one year terminate a network-access agreement with Blue Shield of California. Announced in July, the acquisition would be the second-largest merger in managed-care history, creating a national insurance powerhouse with 26 million members. The deal is expected to close by year-end or shortly thereafter. -- by Laura B. Benko