Pennsylvania’s two largest health insurers are in talks for a possible merger, according to a memo one of the companies’ chief executives sent to employees last Friday.
Joe Frick, president and chief executive of Independence Blue Cross in Philadelphia, said the company has been in talks with Highmark Inc. for the past year.
Next week, the boards of the two nonprofit health insurers will meet separately to “consider and vote on whether to combine the two companies,” Frick wrote.
But Frick also cautioned that there is no certainty the talks will result in a merger.
A spokesman for Pittsburgh-based Highmark said the two insurers have been in discussion for months on ways they can work together better. He declined to elaborate.
Independence Blue Cross serves about 3.4 million members, most of them in the Philadelphia area, while Highmark has over 4 million from western Pennsylvania to the Lehigh Valley.
Combined, the two command over 53 percent of the state’s insurance market, according to the 2005 report from the National Association of Insurance Commissioners.
Independence Blue Cross had annual premiums of $8.3 billion while Highmark had $7.9 billion, said the report, whose figures were the latest available. The third largest insurer was Capital Blue Cross, which was far smaller with premiums of $1.8 billion.
A possible merger is a concern to small businesses, which have seen their medical premiums rise in recent years.
“It could lead to higher rates when you have fewer choices,” said Kevin Shivers, state director of the National Federation of Independent Business. “There is very little competition already.”
He said that a merger between the two health insurers should cause “pause among insurance regulators and the Legislature.”
On the Net:
Independence Blue Cross: http://www.ibx.com
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