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Senate Majority Leader Bill Raggio, R-Reno, could make more than $600,000 if a pending merger involving one of Nevada’s largest health insurance providers is successful, according to Securities and Exchange Commission documents.

Raggio remains a shareholder in Sierra Health Services, which is being acquired by Minnesota-based United Health Services, after spending more than two decades on its board. He retired about 10 months before the merger was announced.

As a lawmaker, Raggio has no official oversight of the merger. As a retired board member, he had no vote on whether it should take place.

But Raggio, one of the state’s most powerful politicians, has stayed out of a growing public debate on whether the acquisition is best for Nevada, refusing to join other political leaders in calling for greater public scrutiny of the deal.

The acquisition has raised concerns about the quality and cost of health insurance in Nevada if one company is allowed to dominate the market.

“I don’t know that this is going to affect that one way or the other,” Raggio said. “It’s the same company, just operating with different ownership. But I’m not going to comment. I’m not involved in that.”

Raggio refused to say how many shares of Sierra Health Services he still owns, making it impossible to determine how much he will make from the merger.

“I own shares of stock as a result of being on the board for 23 years,” he said. “I’ve sold some shares. I’m not going to comment on my holdings.”

Under the merger agreement, Sierra Health stockholders would receive $43.50 per share, $7.60 per share more than the market price the day the merger was announced.

Cheryl Randolph, spokeswoman for United Health, said the company no longer tracks the number of common shares Raggio owns because he is retired from the board.

Based on documents filed by Sierra Health with the Securities and Exchange Commission, Raggio owned 4,000 shares of restricted stock that became fully vested in May. It is unknown whether

Raggio sold those shares when they became vested, or whether he has them.
If they are still his, he would receive $174,000 if the merger goes through. That is in addition to his common stock.

According to the last public filing made by Sierra Health while Raggio was the board, he owned 84,570 shares in March 2006. If Raggio still owned that number of shares when the merger was announced, he would receive $642,732 at the $43.50 acquisition price per share.

The proposed merger has been approved by the boards of United Health and Sierra Health but is subject to approval by state and federal regulators. Under the deal, United Health would control 80 percent of the state’s HMO market and 95 percent of the Clark County market.

The acquisition has drawn harsh criticism from patient advocates, the medical community and top political leaders.

Earlier this month, Gov. Jim Gibbons called for three public hearings on the merger in Elko, Reno and

Las Vegas. Gibbons’ move slowed the approval process, but he refused to take a position on the merger.

“When it goes through, we want to make sure the concerns are addressed,” he said. “The state has an obligation to make sure this merger does not impact the health care of the people of Nevada.”

Asked whether Gibbons should have called for hearings, Raggio said he had no opinion.

“I can’t comment on what he does,” Raggio said. “I assume he thinks it is appropriate.”

Assembly Speaker Barbara Buckley, D-Las Vegas, testified at the Las Vegas hearing.

“Monopolies tend to be very bad for health care,” she said. “They can drive prices up and can drive quality down.”

Raggio’s position exemplifies the conflicts of interest characteristic of Nevada’s citizen legislature.

During his time on the Sierra Health board, Raggio abstained from many legislative votes that involved health insurance policy.

“If this were a full-time legislative state, it would raise more issues,” said Eric Herzik, a Republican and political scientist at the University of Nevada, Reno. “But it is a part-time job. And he’s got to make money. He’s no less entitled to make money than is (state Sen.) Maggie Carlton (D-Las Vegas) working as a waitress.”

Larry Matheis, executive director of the Nevada State Medical Association, said “a lot of prominent

Nevadans” could have conflicts of interest in a merger this size.

“There’s no question this is a good deal for the two companies involved,” Matheis said. “The question is whether it is a good deal for Nevadans. A lot of investors stand to make money off of this proposal, but you still have to look at the public policy considerations.”

Buckley acknowledged such conflicts of interest are common, but said this one keeps Raggio out of a debate of significant public interest issue.

“The downside is you can’t express your opinion,” she said. “You miss the leadership you could provide on the issue because you’re not able to take part in the debate. That’s certainly true in this case.”