UPDATE 1-U.S. allows WellPoint-Amerigroup deal after unit sale

WASHINGTON, Nov 28 (Reuters) - WellPoint Inc can move forward with its $4.5 billion purchase of health insurance rival Amerigroup Corp after Amerigroup alleviated antitrust concerns by selling operations in Virginia, the U.S. Justice Department said on Wednesday.

Without the sale, the combined company would have had a monopoly in the northern Virginia suburbs outside Washington, the Justice Department said.

The companies announced the deal in July, betting the U.S. government would expand its Medicaid program for the poor as part of President Barack Obama's health insurance overhaul.

The Justice Department said it was concerned about consolidation in northern Virginia because WellPoint and Amerigroup were the only two providers of Medicaid managed care plans there.

The sale of Amerigroup's Virginia unit to Inova Health System Foundation ensured that competition in the market will continue, the department said. The Virginia Attorney General's office worked with federal officials on their review.

"Preserving competition in healthcare markets is vital to ensuring that consumers receive better and more innovative health care services," said Renata Hesse, acting U.S. assistant attorney general for antitrust matters.

WellPoint and Amerigroup did not immediately respond to requests for comment.