By: Health Insurance
Submitted: 2009-10-01 13:20:18 | Word Count: 743
United Healthcare's pending acquisition of the licenses of Shelton-based Health Net of the Northeast has created some uncertainty about the future of approximately 1,000 jobs in the state and caught the attention of Connecticut's attorney general.
"We're going to be looking into whether and how United Health is dealing with, retaining or discharging, employees of Health Net," Attorney General Richard Blumenthal said Wednesday. Blumenthal said he could not comment on the matter further.
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United Healthcare announced in July plans to buy Health Net of the Northeast's licenses and the option of renewing enrollments in a deal valued at more than $500 million.
It is expected to close next year and then take some more time to transition the business between the companies. Both companies said the deal should not impact customers this year and only after the 2010 enrollment period will customers likely start to see a change.
While the impact on customers is expected to be in name and options for plans, the impact on employees of Health Net could be more drastic.
On Wednesday, United Healthcare spokesman Daryl Richard confirmed the acquisition does not include employees.
Health Net of the Northeast has operations in Connecticut, New York and New Jersey, with an estimated combined employment of nearly 1,500. The majority, however, work in Shelton.
United Healthcare employs about 4,000 people in Connecticut, including some in Trumbullwhere United's Oxford Health Plan is located. Richard said United Healthcare is buying the right to renew Health Net enrollments and referred questions about the future of Health Net employment to Health Net.
"We will continue to exist in 2010," said Alice Ferreira, a Health Net of the Northeast spokeswoman, who pointed to the company's filing of Medicare rates for next year as proof of that.
She said answering questions about Health Net's operations in 2011 would be speculative at this time. But when regulators in Connecticut, New York and New Jersey reach a decision on the deal with United Healthcare, the future will be more clear, she said. Employees, members and providers have all been apprised of the situation and if they want more details they can call 1-800-848-4747, Ferreira said.
In its original press release, Health Net noted it expects to have about $20 million in negative costs related to several items, including severance.
The Connecticut Department of Insurance confirmed Wednesday the deal is under review and copies of the file are available at its office in Hartford. There is no deadline for a decision, but once one is reached, the department must hold a public hearing on the matter within 30 days.
Despite the uncertainty, the Greater Valley Chamber of Commerce remained hopeful that United Healthcare will become as big a player in the community as Health Net.
"I can't comment on the transaction itself," said Bill Purcell, the chamber's president. "I can say how pleased and proud we are to have enjoyed Health Net's presence here in the Valley. They're a wonderful corporate citizen."
He said Health Net's value to the community is considerable. It provides good jobs and its employees and executives are very involved in helping out the community.
"What the future holds, we can only hope for the best," Purcell said, adding his group will welcome United Healthcare into the community.
He concluded, "We can only hope for a successful transaction and a successful transaction for the Health Net associates."
What the deal means For customers: For now, nothing will change. Employees who have insurance through Health Net will continue to be covered by them until their next open enrollment period, in which the options will be replacement with UnitedHealthcare options. For employees: The sale to UnitedHealthcare did not include a transfer of employees. However, since the transition from HealthNet plans will take time, employees are safe for now.
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