As a condition of the merger of UnitedHealth Group Inc. and PacifiCare Health Systems Inc., the federal Department of Justice is requiring PacifiCare to sell some of its health insurance business in Boulder.
The $8.2 billion deal is the largest health insurance merger ever in Colorado and would create the nation’s second-largest health plan behind WellPoint Health Networks Inc.
UnitedHealth would get 27 percent of Colorado’s market. In Boulder, it would have 30 percent of doctor billings, the Justice Department said.
Colorado Insurance Commissioner David Rivera is slated to rule on the acquisition today.
UnitedHealth and PacifiCare have agreed to the divestiture, which includes selling PacifiCare business in Tucson, court documents state.
The insurers agreed to terminate UnitedHealth’s use of the Blue Shield of California’s physician network.
“Health care is an intensely competitive business right now, and I think the Department of Justice and both companies are interested that it remains so,” said Tyler Mason, a PacifiCare spokesman.
In a lawsuit filed Tuesday in U.S. District Court in Washington, the department said the proposed acquisition would give UnitedHealth enough market share to muscle Boulder physicians into accepting lower payments.
Such market pressures could reduce the number of physicians for patients in the area and erode quality of care, the department found.
PacifiCare’s Boulder membership is in a few large accounts and the divestiture requires the insurer to terminate its contract for HMO benefits to 6,000 University of Colorado employees or sell off 6,066 other policies.
Colorado physicians have been the most vocal foes of the merger, expressing concerns over the impact on their practices and patients.
“For the past several weeks, we have been warning the Colorado Department of Insurance that this acquisition, especially in Boulder, will create a hazardous imbalance in power between physicians” and UnitedHealth, Dr. Richard May,Colorado Medical Society president, said Tuesday.
Physicians, consumer groups and lawmakers have asked Rivera to consider conditions on the deal similar to those required by California.
California approved United Health’s acquisition of PacifiCare on Monday, provided the company pay $250 million for medical care for the poor and $13.7 million in physician incentives. The state also required United to assure it will not pass any of the deal’s cost to consumers.
Rivera did not answer requests for comment.
Staff writer Marsha Austin can be reached at 303-820-1242 or maustin@denverpost.com.
