Highmark Merger Has Hearing in Pittsburgh

A hearing in Pittsburgh today will help the Pennsylvania Insurance Department decide whether Highmark should be allowed to merge with Independence Blue Cross in Philadelphia. The head of Highmark, Ken Melani, told the Insurance Commissioner that the two companies are a perfect fit because they do not share markets, have the a divergence of expertise and can find one billion dollars in savings in the first six years. He says the savings can be used to improve products offered to consumers. Consultants hired by the company say those are real savings found in bottom up audits of the two non-profit insurance providers, not just studies of similar mergers.

Detractors say while the two providers may not be in direct competition today, that does not mean they would not enter each other’s markets if the merger was denied. Opponents also fear the merger would have a chilling effect on other companies looking to compete in the market.

Melani says Highmark has no desire to enter into the Philly market because it would be too expensive, and the effort would probably fail. Commissioner Joel Ario voiced concerns over the 1 billion dollar projection, wondering of any of that money could be saved through better management of the two existing companies. He also wants to look at the amount of “surplus” the combined company would keep.