PacifiCare/United Health Care Merger

Published on

KPCC Public Radio 89.3FM (Pasadena, CA)

SANTA ANA, CA — Opponents of a proposed HMO merger brought potbellied pigs to a regulatory hearing in Santa Ana today to press their point that the deal smacks of a “piggish” payout to executives at consumer expense.

Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights said the proposed merger of Cypress-headquartered PacifiCare Health Systems Inc. and Minnesota-based United Health Group will, if approved, provide $400 million in cash and stock benefits to top executives and allow another $389 million in reserves to be removed from the state.

“We’re here today to join with PacifiCare HMO members to protest the ‘pork-out’ at the PacifiCare hearing on the proposed merger with United Health Care,” Flanagan said.

Flanagan, accompanied by retirees David and Patricia Parker of the city of Orange and Deni Mosser, a Los Angeles self-employed businesswoman, were set to testify at a public hearing called by the Department of Managed Health Care to gauge public reaction to the proposed merger.

Mosser said outside the hearing, which was held in the Santa Ana City Council Chamber, that she struggles to afford health insurance and has just seen a 27.6 percent hike in her payments.

She said she is “terrified” of any more increases because she will have to give up insurance.

“I don’t even use my insurance,” she said. “I’m afraid some clerk will say that (Mosser) has used it too many times… and out I go. We’re really hostages to the health insurance industry.”

Flanagan said patients should care about the merger because “every dollar that is given out to executives or transferred to out-of-state companies in mergers means patients and business owners have to pay more for their health care.”

“We’ve brought our pigs here today to represent the porkout that’s going on in the proposed merger and the feeding at the trough that’s occurring at the patient’s expense,” Flanagan said.

But Tyler Mason of PacifiCare said the merger with United, which has a nationwide reach, will give it access to expanded resources that will enhance the HMO’s ability to deliver health care services and to mitigate prescription drug costs.

“This isn’t about a bigger company,” Mason said. “It’s about a better company.”

He said “most of the benefits that our executives are going to receive from this deal were already vested based on prior performance. The United executives will receive no compensation for this deal.

“Premiums are reflective of underlying health care cost trends, i.e. hospital costs, physician costs (and) pharmaceutical costs,” Mason added.

Lynne Randolph of the Department of Managed Health Care said her agency’s mission is to ensure that enrollees’ interests are protected.

The department, she said, has a say in the matter “as it impacts PacifiCare of California.”

“Obviously since they are based here in California, most of the employees reside here and a great deal of the ratepayers are here, we do have a large say in what’s going to happen,” Randolph said.

She said a second hearing is set for Sept. 16 in Sacramento and will focus on public policy issues.

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