Pa. Insurance Commissioner Explains Death Of Highmark-independence Blue Cross Deal

By Author: Constance Martinez
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Pennsylvania Insurance Commissioner Joel Ario on Thursday outlined the reasons behind his intent to turn down the proposed merger of health insurers Independence Blue Cross and Highmark.

Ario was set to render his decision on the proposal on Jan. 27. On Wednesday, that became moot after the two insurers withdrew their application.

IBC in Philadelphia and Highmark of Pittsburgh said they were unwilling to adhere to an Insurance Department condition that it operate under either the Blue Cross or Blue Shield trademark and surrender the other trademark.

The department wanted that action to allow another Blue Cross or Blue Shield plan, from inside or outside Pennsylvania, to compete in the Philadelphia and Pittsburgh markets.

Competition was the key issue here, said Ario, noting it was one of three conditions the Insurance Department would have placed on any approval.

The other two conditions for approval, he said, would have been related to how the estimated $1 billion in public benefits realized by the deal would have been used and fair market practice issues such as transparency.

Ario ...
... said he believes another Blue plan, such as national competitor WellPoint Inc. of Indianapolis or Capital Blue Cross in Harrisburg, Pa., would have wanted to compete in southeastern Pennsylvania if one of the trademarks became available.

Bigger is often better, but it's not always better, Ario said. In this case bigger would have been bad for consumers.

Ario said the merger would have created a single company with a 59 percent market share, more than three times that of the next highest private insurer.

That market share he said would have limited choice for consumers and given the company too much leverage in contracts with providers.

Ario noted the review of the proposed merger, which involved 50,000 pages of materials, was the most extensive review ever undertaken by the Insurance Department .

Jim Lit (not associated)

This says it all "given the company too much leverage in contracts with providers." In other words, a large company would have been able to get soaring provider charges under better control due to their size. Since insurance is all about controlling cost/expense, this IS consumer friendly. No doctors were going to stop seeing patients if the merger went through. But if the merger went through, premiums could be kept from growing as fast by controlling provider reimbursement. Enjoy your higher premiums, Public. Doctors will enjoy spending their higher reimbursements.

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