Senate panel recommends against insurers’ merger

The Pennsylvania Senate Banking and Insurance Committee voted, 10-4, today to recommend that Insurance Commissioner Joel Ario turn down the proposed merger between Independence Blue Cross, of Philadelphia, and Highmark Inc., of Pittsburgh.

The merger would create the state's largest health insurer. The final decision rests with Ario, who cannot make it before Jan. 27.

The Republican-led committee also recommended that if Ario did decide to approve the merger, he should approve it with conditions designed to address the concerns of various groups, including hospitals, doctors, and other insurance companies who say the combined company would hamper competition and reduce negotiating clout.

The two Blues have argued that the merger would put them and their subsidiaries, which sell insurance in many other states, in a better position to compete against national giants such as Aetna Inc. while having little effect on competition in the communities served by the two companies.

About $1 billion in savings derived over six years from operating efficiencies achieved through the merger will help stabilize the administrative cost of premiums and provide coverage for the uninsured, the companies say.

Today's vote essentially broke down along party lines, with the Republicans and one Democrat, Lisa Boscola of Bethlehem, voting to oppose the merger. The committee's chairman is Republican Donald White of Indiana, Pa., an insurance broker who has opposed the merger.