Pennsylvania Insurance Commissioner Holds Hearings About Proposed Insurer Merger

Main Category: Health Insurance / Medical Insurance
Article Date: 21 Jul 2008 - 1:00 PDT

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Pennsylvania Insurance Commissioner Joel Ario recently held a series of hearings about whether the merger of Independence Blue Cross and Highmark, the state's two largest health insurers, would benefit or hurt consumers, the Philadelphia Inquirer reports (Von Bergen, Philadelphia Inquirer, 7/17).

The companies, which together serve more than seven million Pennsylvania residents, say the merger would save more than $1 billion over six years, $650 million of which they pledge to use to help uninsured Pennsylvanians obtain coverage. According to data from a 2005 National Association of Insurance Commissioners report, if consolidated, they would control more than 53% of the state's health insurance market (Raffaele, AP/Pittsburgh Tribune-Review, 7/11).

The chief opponents of the merger are physicians, who argue that the merger would lead to decreased reimbursements and reduced competition (Philadelphia Inquirer, 7/17). Pennsylvania Medical Society President Peter Lund said, "With the significant market share the consolidated company would have, provider reimbursement levels could be driven down below competitive levels and contract terms could be more one-sided than they currently are" (AP/Pittsburgh Tribune-Review, 7/11).

People who testified in support of the merger -- including union leaders, business executives, many state representatives and the CEOs of many of the state's health systems -- said that because the companies operate in different regions of the state, the merger would not reduce competition (Philadelphia Inquirer, 7/17). The CEOs from several state health systems said that the merger, along with some protective provisions, could provide an opportunity to overhaul the state's health system (Von Bergen, Philadelphia Inquirer, 7/16).

The public comment period will end in August, with the goal to reach a decision on the merger by Dec. 31, Ario said (Philadelphia Inquirer, 7/17).

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