Lawmakers expected to recommend against Blue Cross merger

Key Pennsylvania legislators likely will urge the state to turn down the proposed merger between giant health insurers Independence Blue Cross and Highmark Inc. or at least to impose strong conditions, sources said yesterday.

Members of the Senate Banking and Insurance Committee are set to vote on its nonbinding recommendations Thursday, but the final merger decision rests with Insurance Commissioner Joel Ario.

The high-stakes merger of the nonprofit Blues would create the largest health insurer in the state.

Independence Blue Cross spokeswoman Elizabeth Williams said the Philadelphia-based company would be disappointed with a negative recommendation, especially given the 10,000 pages filed with the Pennsylvania Insurance Department detailing the merger's positive impact.

"It's difficult to imagine on what grounds a legislative committee could advise the insurance commissioner to reach any conclusion, except that combining Highmark and IBC is good for our members and customers," Williams said.

Highmark spokesman Michael Weinstein could not be reached for comment.

Opponents say the merger would create such a large company that other insurers would be unable to compete in the market.

Doctors, hospitals and other providers worry they would lose clout when negotiating prices for services.

Sen. Donald J. White, chairman of the Senate Banking and Insurance Committee, has long opposed the merger.

"I am extremely skeptical that any true long-term benefits will be derived from this merger," White testified at public hearings in July. The Republican, from Indiana, Pa., is an insurance broker.

"It should come as no surprise that White would do anything but try to protect the consumer," his spokesman, Joseph Pittman, said yesterday.

Highmark, in Pittsburgh, and Independence Blue Cross say that the $1 billion in operating efficiencies they would achieve over six years by merging would allow them to stabilize prices for subscribers and expand coverage for the uninsured.

Once the legislature voices its opinion on the merger, Ario must consider its comments for 60 days.