The American Medical Association (AMA) asked the Department of Justice to block the proposed acquisition of Sierra Health Services by United HealthGroup, and outlined its strong opposition to the merger in a letter to U.S. Attorney General Alberto Gonzales. The AMA has deep reservations about United's goal of dominating the Nevada health insurance market, and in particular the Las Vegas market, by purchasing the state's largest insurer.

"Federal authorities must not allow United's blatant grab for dominant market power," said AMA Board Member J. James Rohack, MD. "The proposed merger would have negative long-term consequences for patients, physicians, hospitals and employers."

If the proposed merger is allowed, the AMA estimates that United would control 78 percent of the HMO market in Nevada, and 95 percent of the HMO market in the Las Vegas-Paradise metropolitan area.
"United's near-monopoly in the HMO insurance market will deter competition and deny patients and employers a choice among HMO plans," said Dr. Rohack. "Potential competitors will be unable to challenge United's market dominance due to the excessive expense of developing a HMO network from scratch."

In its letter to the U.S. Attorney General, the AMA warned that Nevada's projected decline in health insurer competition will allow United to pursue its well-documented single-minded focus on profits.

"Without the threat of competition in Nevada, United will be free to raise premiums above market rates and exercise exclusive power over the purchase of medical services," said Dr. Rohack.

Federal authorities have acted once before against United to preserve a dynamic and competitive insurance market. The Department of Justice required United in December 2005 to divest holdings in its merger with PacifiCare.

"The post-merger market shares gained by United's acquisition of Sierra would be significantly higher than the market shares that forced federal authorities to intercede in United's merger with PacificCare," said Dr. Rohack.

The proposed acquisition of Sierra highlights the alarming trend of consolidation within the health insurance industry. Between 1995 and 2005, there were more than 400 mergers involving health insurers and managed care organizations. The AMA has long cautioned that this trend is responsible for a growing market imbalance where patients and physicians are left vulnerable to the demands of a few giant health insurers.

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