Harvard Pilgrim, Tufts no longer merging

Harvard Pilgrim Health Care and Tufts Health Plan are calling off plans to merge, and the decision is raising as many questions as it answered, including whether Massachusetts's proposed health law made a partnership less pressing and whether Tufts's negotiations to take over Cambridge Health Alliance's insurance arm complicated the Harvard-Tufts calculations, notes the Boston Globe.

But one thing is for sure--Blue Cross Blue Shield of Massachusetts won't have to worry about insurance premium price wars now that a joint Harvard-Tufts insurer doesn't pose significant competition.

Harvard Pilgrim and Tufts had signed a non-binding memorandum of understanding in January to explore a merger, which would have transformed the healthcare industry in Massachusetts and given Blue Cross Blue Shield a heavyweight competitor, reports the Boston Herald.

As the two health payers tried to figure out how to integrate everything from claims processing to billing systems, they concluded the merger would cost more money than initially thought and lacked enough savings to offset the costs, according to the Globe. "The scales just tipped toward the costs being too great," said Harvard Pilgrim President and CEO Eric Schultz.

"We made the thoughtful determination that while we are in the same business, our operations are very different and, in many important aspects, not fully compatible without significant changes to existing processes and applications," said Tufts Health Plan CEO James Roosevelt Jr. "We have the No. 1- and No. 2-rated companies in the country for quality and customer satisfaction and we don't want to do anything to jeopardize that," he told WBUR.

Employers had mixed reactions to the news with some saying they hoped a combined company could negotiate lower prices and others saying they're glad the state will continue to have three strong insurance plans, reports WBUR.

To learn more:
- read the Boston Globe article
- see the Boston Herald story
- check out the WBUR piece

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