Health Insurance Mergers Cause For Close Examination
| Date: April 8, 2007 |
Media Contact: |
Chuck Moran |
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Pennsylvania Medical Society |
| For Immediate Release |
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(717) 558-7820 |
The recent merger announcement from Highmark Blue Cross of Pittsburgh and Independence Blue Cross of Philadelphia has both patients and health care professionals from throughout the state considering if the union will be a blessing or curse.
According to a joint news release from both Highmark and Independence Blue Cross on March 28, the new, combined company will hold administrative fees flat for two years, better manage prescription drug costs, and provide more than $650 million to expand access to the uninsured. The companies also claim that the merger will be good for the state economy, employing 18,000 people statewide and generating an estimated $4 billion to the Pennsylvania economy.
We can respect those goals and contributions of the new company and hope they hold true. However, we know that the new company will be by far the largest health insurer in Pennsylvania and one of the largest in the country. News reports indicate the new company will be the third largest health insurer in the United States. Within the Blue Cross family, mergers appear to be a national trend, where only about a decade ago, there were 110 Blues nationally, and now there are less than 40. News reports indicate that the new company would automatically own 53 percent of the Pennsylvania health insurance market.
This raises cause for concern. Historically, the Pennsylvania Medical Society has voiced strong concerns when insurers decide to merge. Though there is currently no market overlap, and economies of scale should be realized, reduced competition will result. This is not by virtue necessarily good or bad, but market barriers will exist and monopolistic and monopsonistic opportunities will ensue. Will we see uniformity of coverage and forms, reduced premiums, higher medical loss ratios, and fair treatment of healthcare professionals? Or will we see even greater market consolidation, higher prices, and burdened hospitals and providers? I do not know.
Some mergers work, others do not. Certainly, we shouldn’t rush to judgment, nor should we rush any marriage either. Instead, a careful, independent examination must be conducted to ensure no harm is done to consumers. In trying to determine if a Highmark-IBC merger would benefit health care, the Pennsylvania Medical Society has met with the chief executive officers of both companies. We are continuing our dialogue with each company to further investigate the situation and how it will impact patient care.
It is encouraging to see our elected officials in Washington and Harrisburg taking notice. U.S. Senator Arlen Specter is planning hearings and Senator Don White has brought this issue to the forefront with House Bill 550 and his call for hearings as well. HB 550 would give the Pennsylvania Department of Insurance oversight power over mergers involving non-profit health care insurers such as Blue Cross and Blue Shield.
The Pennsylvania Medical Society believes that no merger should move forward until the benefits to patients and health care professionals are well defined. Until that is determined, the Pennsylvania Medical Society will closely monitor the proposed merger and articulate our concerns.
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The patient-doctor relationship has been the priority of the Pennsylvania Medical Society since its founding in 1848. The Medical Society listens to concerns of both patients and doctors to improve the delivery of health care services. To learn more about the Pennsylvania Medical Society, visit its website at www.pamedsoc.org or its consumer website at www.myfamilywellness.org.
Last Updated: 7/17/2008