Insurance deal draws support
At a hearing, speakers from several fields back a merger between the two Blues.
Two insurance brokers, and a union leader and an office-furniture dealer came to the same conclusion but from different points of view.
In today's business climate, it's either grow or die.
That's why, at a public hearing yesterday, they urged Pennsylvania Insurance Commissioner Joel Ario to approve a consolidation between Independence Blue Cross and Highmark Inc.
The merger would create the largest health insurer in the state and one of the largest in the nation.
"It would be terribly unfair to make these insurance companies stand still in the marketplace when every one else is moving," said Wendell Young 4th, president of the 23,000-member United Food and Commercial Workers Local 1776.
Statewide public hearings ended in Philadelphia yesterday with most of the 17 speakers advocating the merger of the two Blues.
Ario said he plans to close the public-comment period on the proposed merger by the end of August, with the goal of reaching a decision by Dec. 31.
Among those speaking on the necessity of growth was David M. Banet, an Exton insurance broker. Market forces, he said, will require the two insurers to grow, either separately or together.
"If they do have at it," he said, referring to a scenario in which the two might compete instead of consolidate, "they'll spend their time hammering each other. But they'll still have to get bigger. That will force them to seek an alliance with somebody else."
His testimony followed that of Lin Thomas, president of Alpha Office Furniture, Flooring & Supplies, a Philadelphia company that sells to both of the Blues. It would be better, he said, to let the companies grow stronger together than to allow "two weaker firms to be acquired." Whatever the business arguments, state law requires Ario to decide based on whether the merger would curtail competition, and, if it would, whether that would be outweighed by benefits to subscribers and the public.
Independence Blue Cross and Highmark argue that they do not compete with each other because they have no overlapping markets. They say efficiencies from the merger would spin off $1 billion in savings to benefit subscribers, the uninsured and other charities.
But three doctor representatives did not see it that way at yesterday's hearing.
Martha Summers, managing partner of Advanced Vein & Vascular Center Inc. in Wayne, said a merger would reduce competition and lead to decreased reimbursement. Her practice, she said, already has "no input whatsoever on our 'negotiated' fee schedule" and is often forced to accept Highmark's rates, which she said were among the nation's lowest. "Independence Blue Cross is relatively accessible," she said. "Highmark takes a very hard line."
Ruth Holland, president of the Chester County Medical Society, and Henry Allen of the American Medical Association also spoke against the merger. While some doctors who testified at public hearings, including three who spoke Tuesday evening, favored the merger, most opposed it.
Nurse Janice Cantwell of Malvern said Independence Blue Cross underwrote training for her third career, after 10 years on Wall Street and 15 years as a math teacher.
"Dreams and goals seldom come cheap," she said, testifying in favor of the merger. Over two days, many representatives of community groups praised Independence Blue Cross' civic engagement.
After the hearings, Joseph A. Frick, chief executive of Independence Blue Cross, said that what he heard made him proud of his company's role in the community.
Highmark's chief executive had a similar response. "We're proud of everything, but we can't be perfect," Kenneth R. Melani said. "We're going to take a look at the questions raised, answer them, and get this consolidation approved."