State and Federal Regulators Must Get Guarantees for Patients, Doctors & Hospitals

Santa Monica, CA — The possible merger of UnitedHealth Group and PacifiCare would create the nation’s second largest health insurer and will result in less choice for patients, lower payments for doctors and hospitals, and more waste in the health care system if conditions for the merger are not set by regulators, according to the nonprofit Foundation for Taxpayer and Consumer Rights (FTCR).

“HMO goliaths like WellPoint and Aetna and a merged UnitedHealth and PacifiCare are so big they don’t have to compete and threaten patient care,” said Jerry Flanagan of FTCR. “With this merger, the health care system is moving to a privately-owned ‘Single Payer’ system where patients will have fewer choices and less leverage. The number of the uninsured will likely increase due to the increased control and costs of the health insurer oligopoly. If we are going to have a Single Payer system, why not let the government pay a lot less for better care instead of turning the health care system over to private insurers that take 20% for overhead and profit.”

FTCR noted that past mergers have done nothing to lower premiums or increase efficiency in the health care system. In fact, patient premiums have been increasing at double digit rates over the last several years and less competition removes any incentives for efficiency. In comparison to private HMOs, government sponsored health care programs like Medicaid and Medicare have overhead costs of less than 5%. Double-digit premium increases have resulted in more uninsured Americans, including large increases among working families.

FTCR said it would call on state and federal regulators to:

* Investigate and limit executive payouts resulting from the merger. Such payouts lead to higher patient premium costs and make health care more unaffordable for average Americans. FTCR was first to uncover up to $600 million in executive payouts allowed under the recent merger of WellPoint with Anthem.

* Seek guarantees that patients will not face new restrictions on which hospitals and doctors they can visit or limited access to necessary prescription drugs and other medical treatments.

* Investigate whether increased HMO market control will result in smaller payments to doctors and hospitals that could threaten local health care providers.

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The Foundation for Taxpayer and Consumer Rights (FTCR) is a leading nonpartisan consumer advocacy organization.