UnitedHealth Takes Over The World

Mrs. Many Risk Factors, Meet Dr. Shareholder

Is there anyone left in Minnesota who still believes our health care system is truly nonprofit? If there is, please gently shake that person awake from their Rip Van Winkle reverie and explain to them that not only is health care a poorly regulated hive of profit, it's boated to the point where it's moving away from the free market and toward near-monopoly territory. Minnetonka-based UnitedHealth announced this week that it would take over California's PacifiCare Health Systems, Inc. in a deal worth $8.1 billion. According to the Wall Street Journal--the newspaper doing the best job of covering health care as a business--the deal threatens such once-large companies as Aetna, Cigna, and Humana by making them vulnerable to takeover.

The Journal predicts the deal will have other far-reaching impacts, not the least of which is that consumers will increasingly see risk shifted from their health insurers to their own checkbooks through a nefarious little "consumer-driven" device called a health savings accounts. The Journal's site is subscription only, but here's a taste:

A coast-to-coast platform will also help it in its ambitious effort to dominate an emerging type of employee health benefit where many in the industry see big growth potential -- so-called

Cigna's chief executive, H. Edward Hanway, predicts that nearly half of Americans with commercial health-care benefits will be in some form of consumer-directed plan by 2007. UnitedHealth's Dr. McGuire, a pulmonologist by training and butterfly collector by hobby, has been more cautious about the trend, saying in a recent interview, "Consumer directed plans are just a piece of what we want health care to be."

Many of UnitedHealth's recent acquisitions have been designed to help the company compete in this new arena. Last November, United bought Definity Health Corp., one of the biggest administrators of consumer-directed plans to large, self-insured employers; a year earlier, it acquired Golden Rule, a pioneer in selling such plans to individuals. It also has chartered its own bank, Exante, to administer the savings accounts. UnitedHealth already has more than one million people enrolled in consumer-directed plans, far more than any other company.

A member of City Pages' extended family was recently forced to sit through a benefits company's presentation on the merits of these plans. He reports that the chipper young marketing grad conducting the open-enrollment season session was completely unable to explain how health savings accounts work, but assured the suckers in attendance that the bottom line was that if they never got sick, they'd never have to spend any money.

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