Questions raised on PA Blues merger

The Pennsylvania Insurance Department has released two reports analyzing the potential impact of the proposed merger between Highmark and Independence Blue Cross, which have raised some concerns about the merger's effect on long-term competition, as well as whether the merger could lower provider reimbursement. The two not-for-profits, which announced their plans to merge in March 2007, would create the third-largest Blue plan in the nation if they combine.

According to one report, by economic adviser LECG, the merger wouldn't prevent competition in the state, but could tighten up Highmark's dominant position in the west part of the state and Independence's grip on southeast Pennsylvania.  Meanwhile the Blackstone Group, a financial adviser, concluded that the merger wouldn't harm the financial health of either plan, and that policyholders would still likely have access to the same providers, health plan choice and customer service--but that they weren't sure whether the merger would lead to lower payments to providers. (Sort of a key question to waffle on, isn't it?)

To learn more about the analysis:
- read this Modern Healthcare piece (reg. req.)

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