Three health insurance companies for decades have dominated the Buffalo market, determining what policies are sold and how much they cost.
Now that's about to change.

UnitedHealth Group, the second-largest health insurer in the nation and parent of Definity Health, is coming to upstate and Western New York with its full line of insurance products starting Nov. 1.

Reaction is mixed.

Consumers may benefit from more choices and competition. But others, especially doctors, worry that the company may use its influence to limit payments and care.

The Minnetonka, Minn.-based insurer has been lining up a provider network in the region and is actively marketing to employers, consumers and brokers, even with billboards.

"We are very seriously committed to coming into this marketplace," said William J. Golden, CEO of United HealthCare Corp. of New York and New Jersey. "We're very excited about the increased opportunities here. We think we bring some great things to this marketplace."

The arrival of United represents a major challenge to the region's three dominant health insurers, all locally based nonprofits that tout their community ties and missions.

HealthNow, Independent Health and Univera Healthcare have comfortably controlled the market in the region for decades, allowing them to build market share without encroachment from a firm with the resources of United.

"You have three high-quality insurers that have good brand strength and loyalty," said John Lynch, senior vice president at First Niagara Risk Management. "Both Buffalo and Rochester will be hard to penetrate, but United is a national player, and brings a lot of bench strength and experience."

United is a behemoth serving 70 million people through six businesses. The company employs 55,000, and has contracts with 500,000 physicians, 60,000 pharmacies and 4,600 hospitals.

In 2005, it earned $5.37 billion before taxes and interest, on $45.37 billion in revenues.

United's arrival comes as employers and individuals in Western New York and nationwide face rising health insurance premiums and medical costs, driven by wider use of prescription drugs and costly technology. Premiums have risen at near double-digit rates for much of the last decade, and all sides say it's not affordable.

As a result, employers and insurance brokers were thrilled at the news of new competition, noting United's financial stability, creative products, online services and network.

"It will be a win-win for employees and employers," said Jeff Pedro, chief financial officer for contractor CIR Electrical Construction Corp. "Having another competitor in the mix can only help minimize increases."

The three dominant nonprofit insurers say they are undaunted, comparing a distant for-profit corporation beholden to shareholders to local nonprofits they say are responsive to the community.

"We're confident that the Buffalo community will continue to recognize the value that we offer," said Mary Lee Campbell-Wisley, regional president of Univera, a subsidiary of Lifetime Healthcare Cos.

The nonprofits are also eager to point out United's problems: A smaller doctors' network and lesser national ranking for quality care.

"United has a very different approach than we do or the other not-for-profit health plans," said Dr. Michael Cropp, CEO of Independent Health. "As a not-for-profit, we view ourselves as a community asset and health care as a community asset."

HealthNow, parent company of Blue Cross, has warned that a national competitor would roll into town. "It should come as no surprise to any regionally based health plan that national competitors are entering our markets," HealthNow CEO Alphonso O'Neil-White said by e-mail.

Some doctors fear the company will use its massive size to tighten physician reimbursements and pressure hospitals to give in to its demands. That could be a tough sell in an area where reimbursement payments are already low.

"United definitely puts pressure on the delivery system," said Dennis Horrigan, president and CEO of the Catholic Independent Practice Association, which represents the doctors of Catholic Health System. And if providers have a problem getting paid, critics say, it's a lot harder to get it resolved with a carrier hundreds of miles away.

"When you have a problem with a national carrier, it's not as easy to ask the CEO to come in to talk to them," said David Aston, employee benefits manager at Niagara National Insurance Group. Such arguments don't sway United's Golden, who said the company has competed successfully against nonprofits around the country. "I think this market is ready for a national competitor to come in and push something that the local plans aren't ready or able to provide," he said.

United is known for consumer-driven health care - high-deductible plans coupled with health savings accounts, forcing consumers to take responsibility for medical decisions and absorb more costs. United provides the same disease management, wellness and outreach programs in traditional plans as it does in the consumer-driven plan.

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By JONATHAN D. EPSTEIN

e-mail: jepstein@buffnews.com

News Business Reporter

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