For Immediate Release
10/30/07

Contact:

Joe Pittman
(717) 787-8724

- Sen. Don White
- Sen. Corman
- Sen. Robbins
- Sen. Mary Jo White
- Part 1   Part 2   Part 3
 

Committee Questions Highmark, IBC on Merger

Concerns raised about competition, social mission

The Senate Banking and Insurance Committee today (October 30) questioned the CEOs of Highmark Inc. and Independence Blue Cross (IBC) about the impact the pending merger of those companies would have on competition in the health care insurance market, according to Committee Chairman Senator Don White (R-41).

Addressing a contention by the two Blues officials that their companies are at a competitive disadvantage because they must cover higher-risk people that other companies won't, Senator Jake Corman (R-34) said the Blues' responsibilities weren't cutting into their market shares or their financial bottom line.

"You are sitting on lion's share of the market and your reserves are healthy, it's a tough sell to say you are not competitive in the market," Senator Corman said.

Chairman White also questioned the Blues contention that the merger was needed to address competitiveness issues. "Based on our figures your market share has gone up 19 percent in the past five years and your rates have gone up significantly in the last 5 years," he said.

Currently, Highmark is the largest insurance provider in Pennsylvania with about 26.79 percent market share and Independence Blue Cross is the second largest with 26.49 percent of the market.

Under questioning from Senator Bob Regola (R-39), the Blues officials said the merged company would maintain dual headquarters in Pittsburgh and Philadelphia, but expected to cut 1,000 jobs from their combined payroll.

Several Senators questioned the "social mission spending" by the Blues and how it could be affected by the merger. Senator Corman and Senator Bob Robbins (R-50) expressed concerns about any deal making for the merger that resulted in Blues funding for the Administration's socialized medical care proposals.

"I don't want to see you receive approval (for the merger) and then you up your commitment to some government program," Senator Corman said. "There's going to be a problem if that happens."

"I hate to see social mission driven by an outside source. I am concerned when you are driven to support state programs and initiatives," Senator Robbins said. "I hope that you can deal with the pressures."

Committee members, particularly Chairman White and Senator Gib Armstrong (R-13) also raised concerns, about the relationship between the Blues social spending and the tremendous amount of money that goes for advertising.

Under questioning from Senator Armstrong, the Blues officials said some advertising was considered social spending, while they could not support a start up bio-tech or other health care related business in Pennsylvania as part of its social mission.

Chairman White questioned the need for the intensive spending by the Blues for advertising. "I am extremely concerned about all of the advertising. The last thing you need in name ID," Chairman White said. "Everybody knows the Blues."

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