Highmark, IBC Merger is still unsettling for Pa. hospital group

The Hospital & Healthsystem Association of Pennsylvania (HAP) reiterated its opposition to the merger of Pittsburgh-based Highmark, Inc. and Independence Blue Cross, during testimony before the U.S. Senate Judiciary Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights.

An agreement to combine the two insurers was approved by the companies in March 2007.

Carolyn F. Scanlan, president and CEO of HAP, said the merged health plans will have a negative impact on provider contracting, and she called for greater oversight of the contracting process.

According to the two organizations, the merger will generate more than $1 billion in economic benefits and provide access to affordable, high-quality healthcare coverage for Pennsylvanians.

"There must be appropriate parameters - checks and balances - so that there isn't unchecked use of market power in these negotiations," said Scanlan. "Failure to establish effective parameters could unduly drive down provider reimbursement to inadequate levels, thus jeopardizing access to quality healthcare and the long-term financial sustainability of essential community healthcare services."

But supporters say the combination will have the resources to:

  • Hold administrative fees flat for two years, resulting in direct savings to customers of $300 million,
  • Better manage prescription drug costs, which are expected to result in $280 million in drug cost savings for customers.
  • Provide more than $650 million to help expand access to health insurance for Pennsylvania's uninsured population.

"The resulting market power of the merged plans could drive provider reimbursement levels below competitive levels needed to sustain the availability of quality healthcare to Pennsylvania's citizens," Scanlan argued.

"This combination is great for our customers, our providers, our employees, our communities, and for Pennsylvania," said Kenneth R. Melani, MD, president and chief executive officer of Highmark.

"The new company will continue to serve as an economic engine for Pennsylvania, employing approximately 18,000 people statewide and having an estimated $4 billion impact on the state's economy," added Joseph A. Frick, IBC's president and chief executive officer.

Scanlan also called on Pennsylvania regulators to assure that the merged plan will continue to fulfill the social mission and community obligation originally prescribed in the 1930s-era legislation that created Pennsylvania's hospital plan and professional health services plan corporations.

What is your opinion about this merger? E-mail Associate Editor Molly Merrill at

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