Corporate & Securities Law

PA Health Insurance Company Merger Before the US Senate

By David Fischer

Last week, the Senate Committee on the Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights held a hearing titled “Consolidation in The Pennsylvania Health Insurance Industry: The Right Prescription?” regarding the merger between Independence Blue Cross and Highmark. There were numerous witnesses (links to prepared testimony):

• Joe Frick, President and Chief Executive Officer of Independence Blue Cross
• Kenneth R. Melani, M.D., President and Chief Executive Officer of Highmark Inc.
• Carolyn Scanlan, President and Chief Executive Officer of Hospital and Healthsystem Association of Pennsylvania
• Samuel R. Marshall, President and Chief Executive Officer of Insurance Federation of Pennsylvania, Inc.
• David A. Balto, a Senior Fellow at the Center for American Progress 
• Henry Allen, Counsel at in the AMA?s Private Sector Advocacy Department
• Michael Laign, President and CEO of Holy Redeemer Health System
• Henry Miller, Managing Director of Navigant Consulting for UPMC Health Plan
• Barry Harris, Principal and Board Chairman of Economists Inc.

The AP (via CNN) reported that:

Two senators on Thursday said they were concerned that mergers among health insurers were leading to higher premiums for consumers _ and questioned whether a proposed merger between Pennsylvania’s two largest health insurance companies was a good idea.

The comments by Sens. Arlen Specter, R-Pa., and Herbert Kohl, D-Wis., came during a Senate Judiciary subcommittee hearing on a proposed merger in Pennsylvania that would create the state’s largest health insurer.

…

Kohl, chairman of the subcommittee that oversees antitrust matters, said the number of health insurers nationally has fallen 20 percent since 2000 and he questioned whether the Justice Department has done enough to enforce antitrust law in the industry. He said he planned more hearings on the issue and has sought an investigation by the Government Accountability Office.

Similar to hearings in Pennsylvania, the chief executive officers of the health insurance companies testified that the merger in Pennsylvania would save more than $1 billion over six years by reducing overhead expenses. The companies have said $650 million of that savings would go to assist uninsured Pennsylvanians.

“We are committed to help make health insurance more affordable,” said Joseph A. Frick, the president and CEO of Independence Blue Cross.

Full post as published by Antitrust Review on August 04, 2008 (boomark / email).