Competition Between Two Pennsylvania Blue Cross Insurers Would Improve Market For Consumers, Report Finds

Main Category: Health Insurance / Medical Insurance
Article Date: 16 Sep 2008 - 8:00 PST

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Pennsylvania health care providers and consumers would benefit more if insurers Independence Blue Cross and Highmark Blue Cross Blue Shield remained competitors rather than collaborators, according to a consultant hired by the Pennsylvania Insurance Department to evaluate the issue, the Philadelphia Inquirer reports. Illinois health economics firm LECG conducted the study. A "no compete" agreement between the two Blue Cross insurers expired last year and the companies have made plans to merge. Highmark is based in Pittsburgh and Independence is based in Philadelphia.

According to the LECG report, competition between the insurers would bring lower premiums and better deals for health care providers. The report also found that Highmark "appears to be in a particularly good position to enter the Philadelphia area successfully compared to other insurers." However, Highmark CEO Kenneth Melani at a public meeting in July said the company does not intend to enter the Philadelphia market. The company disagrees with LECG's findings and the two insurers contend that a partnership between them would result in more than $1 billion in savings over the next six years. The report also stated that the two companies currently do not compete and that their estimates of possible savings were realistic.

Insurance Commissioner Joel Ario has not yet decided whether to approve the merger plans but said he expects to reach a decision by early next year (Von Bergen, Philadelphia Inquirer, 9/12).

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