Pennsylvania Health Insurance Companies
The big health insurance news out of the Keystone State is the proposed merger of Blue Cross of Philadelphia and Highmark Insurance Company of Pittsburgh, but if the merger does happen who will really benefit?
In a State and two urban environments where unemployment is high and access to affordable health insurance is already a problem, those opposed to allowing this merger see very little benefit to Pennsylvania's insurance consumers. They believe that this merger will be bad for policyholders of the two companies, for their employees, and for the State. It is up to the state insurance regulatory commission of course to approve the proposed merger. But opponents feel that a lot of what has been said by the companies to pass muster with health insurance regulators and state and county politicians is untrue. The Two Blue Cross Insurance Companies claim the merger will result in savings of billions of dollars, yet they claim that the New Company formed from the merger will still maintain its current two corporate headquarters in Philly and Pittsburgh, and will not lay off any employees. Opponents find this hard to believe, as in most mergers of big companies the first "cost cutting measure is letting go "duplicate" employees and departments. Health insurance companies of all corporations should know that the best way to save money and cut costs is by reducing the cost of health insurance coverage. And the best way to save on employee health insurance, is to have fewer employees. As for maintaining both HQ's this seems an obvious ploy. Why would a merger that's purpose is streamlining and gaining efficiency require two headquarters?
Many say that the stated goals of the merger, to improve service and provide better, more affordable health coverage to current subscribers and Pennsylvania's uninsured, are just a smokescreen for a large corporation wanting to grow larger and increase its political and market place power. The companies claim they will make health insurance more affordable by lowering rates due to cost efficiencies and synergy that will result from the merger. But opponents feel that what will really happen, as has happened in other states that have allowed such mergers, competition will decrease, and the marketplace will suffer.
Highmark itself was the result of an earlier merger of two Blue Cross Health Insurance Companies, Blue Cross of Western Pennsylvania and Blue Shield of Pennsylvania. Some say that merger should never have been allowed by the Pennsylvania Insurance Department, let alone this now larger one. There is also suspicion among those who oppose such health insurance company mergers that the real motivation is to take the companies from non-profit to profit or stock companies. There is no indication or evidence of that being the case here. Most who oppose the merger hope that the Insurance Department will not approve it mainly because it is anti competitive, and therefore anti-consumer. It will create a monopolistic mega-corporation with a 53% share of the market. This cannot be helpful in an emerging era in health insurance reform that is supposed to be giving the consumer more power to create affordable health insurance.