Merger of UnitedHealthcare and Oxford Health Plans

You asked for (1) information on the proposed merger of UnitedHealthcare and Oxford Health Plans and (2) suggested questions for the Connecticut Insurance Department's July 8, 2004 public hearing.

On April 26, 2004, Oxford Health Plans, Inc. and UnitedHealthcare, a wholly-owned subsidiary of UnitedHealth Group, announced an agreement to merge. According to press releases issued by the companies, after the merger Oxford will (1) be a wholly-owned subsidiary of UnitedHealthcare and (2) continue to operate under the Oxford brand name. Reports indicate that UnitedHealthcare plans to merge its local business operations into Oxford's, making Oxford's Trumbull, Connecticut offices the regional center for the combined company's Connecticut, New York, and New Jersey tri-state area. The merger is subject to approval by federal and state regulators and shareholders.

Under the agreement, Oxford shareholders will receive 0.6357 shares of UnitedHealth Group stock plus $16.17 in cash for each share of Oxford stock held. The total price of the agreement is approximately 54.7 million shares of UnitedHealth Group stock and $1.4 billion cash.

According to company documents, Oxford (http://www.oxhp.com) provides health plans to employers and individuals primarily in Connecticut, New York, and New Jersey. Its commercial insured products and services include traditional health maintenance organizations, preferred and exclusive provider organizations, point-of-service plans, and consumer-directed health plans. Oxford also offers Medicare plans and third-party administration of employer-funded plans. Total fully insured commercial membership is 1.4 million members.

Company documents indicate that UnitedHealth Group (http://www.unitedhealthgroup.com) is a diversified Fortune 100 company that provides a broad spectrum of resources and services to help people achieve improved health and well-being through all stages of life. UnitedHealth Group offers products and services through six operating businesses: UnitedHealthcare, Ovations, AmeriChoice, Uniprise, Specialized Care Services, and Ingenix. Through its family of businesses, UnitedHealth Group serves more than 55 million individuals nationwide.

1. What impact will the merger have on people currently enrolled in UnitedHealthcare or Oxford plans?

2. How will the merger affect Connecticut health care providers? Will contracted providers need to re-contract because of the merger?

3. Describe how local operations will be consolidated. What is the anticipated job loss or displacement within Connecticut?

4. Will the claim, eligibility, and billing systems be integrated after the merger? If so, how will you ensure that the integration goes smoothly and without customer service disruption?

5. What impact will the merger have on competition within Connecticut?


June 30, 2004		2004-R-0551
MERGER OF UNITEDHEALTHCARE AND OXFORD HEALTH PLANS

By: Janet L. Kaminski, Associate Legislative Attorney