PROVIDENCE – Gov. Donald L. Carcieri Tuesday expressed “serious concerns” about United HealthCare of New England’s planned payment of a $36.8 million extraordinary dividend to the insurer’s parent, Minnetonka, Minn.-based UnitedHealth Group Inc.
The proposed dividend would be the latest in a series United Healthcare has paid to the parent company in recent years.
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“Unfortunately, United’s plan to issue a $36.8 million dividend runs contrary to the health care reforms we have achieved in recent years,” Carcieri wrote in a letter Tuesday to state Health Insurance Commissioner Christopher F. Koller, which was entered into the record of the state hearing on the dividend plan. “It also conflicts with my administration’s continuing efforts to reduce health care costs for Rhode Islanders.”
Attorney General Patrick C. Lynch noted in his own letter to Koller that the proposed payment, together with another recent dividend, would bring the total paid by United HealthCare to its parent “an unprecedented $54 million in less than one year.” Lynch urged the health insurance commissioner to act before “any more of these excess funds leave Rhode Island.”
The governor argued that the insurer instead should use that money to reduce health care costs to businesses and indivuduals, and to increase reimbursement rates to health care providers, especially those offering primary or preventive care.
“I have made it a policy of my administration to encourage – not discourage – access to primary and preventative care,” Carcieri wrote.
“By utilizing this $36.8 million to increase reimbursement rates to providers, United could better serve our state and, ultimately, the company itself. Such a move would send a strong message to the public that United is committed to these physicians and to the patients that they serve.”
Also Tuesday, parent company UnitedHealth Group Inc. (NYSE: UNH) came under fire from the American Medical Association for its planned purchase of Sierra Health Services Inc.
The $2.6 billion takeover of the Las Vegas-based insurer, announced last Monday, would give UnitedHealth the “potential to exercise monopoly power” in Nevada, the AMA wrote in a letter to U.S. Attorney General Alberto Gonzales, Bloomberg News said. The deal would give UnitedHealth – already the nation’s largest health insurer – control of as much as 43 percent of the Nevada market and 56 percent of the market in Las Vegas, where Sierra is based, the group wrote.
“Federal authorities must not allow UnitedHealth’s blatant grab for dominant market power,” James Rohack, a member of the AMA board and a cardiologist from Temple, Texas, said in a statement. “The proposed merger would have negative long-term consequences for patients, physicians, hospitals and employers.”
But UnitedHealth spokesman Don Nathan told Bloomberg in an e-mailed statement that “The AMA has made a misleading argument.” He said the doctors’ group “focuses narrowly and inaccurately on only one segment of the market, fully insured HMOs, and fails to include the numerous other competing insurance products.”
In New York Stock Exchange composite trading Tuesday, Bloomberg said, UnitedHealth shares rose $1.17 or 2.2 percent to $54.30 at 4:31 p.m. Sierra shares fell 2 cents to $41.30.
Today, UnitedHealth shares were down 11 cents or 0.20 percent to $53.99 at 1:17 p.m. in New York Stock Exchange composite trading, while Sierra shares were down 20 cents or 0.48 percent to $41.35.
