- Blue Cross Merger in Pennsylvania

Winners and Losers

In what is the largest merger of health insurance companies in the history of Pennsylvania, Highmark Blue Cross Blue Shield has joined recently with Independence Blue Cross Blue Shield. The new company will begin with over 18,000 employees and seven million members.

The biggest winners in this merger are those consumers, either individuals or groups, most desired by this new company. (The most desirable consumers are those who consistently generate higher premium income than insurance claim payouts.) By the sheer weight of its size and power, the new Blue Cross Blue Shield will be able to negotiate tremendously favorable prices with pharmaceutical companies, hospitals, physicians and other providers. Without doubt a significant portion of these savings will be passed on to these consumers, either in the form of decreased premium payments or increased insurance protection.

A second group of winners are those consumers who are currently insured by Blue Cross Blue Shield, perhaps with slightly less enthusiasm. Many of these consumers have been insured as part of Blue Cross Blue Shield’s charter obligations. It is possible that this group may be increased as a condition of agreement by the Pennsylvania Insurance Commission. The same dynamics of savings which apply to the first group of consumers will also benefit this group.

Naturally, a large group of losers are the pharmaceutical companies, and to a lesser degree, other medical providers. What Blue Cross Blue Shield defines as new savings becomes lost revenue to this group. Sensitivity will be employed in its negotiations with hospitals, many of which are already facing financial hard times. There would be little to gain for Blue Cross Blue Cross or its consumers if hospitals are forced to discontinue vital services because they are losing too much money.

Although not all other health insurance companies operating in Pennsylvania will be losers in the wake of this merger, many will and may choose to no longer operate in Pennsylvania. Certainly, companies which have considered entering the Pennsylvania are less likely to do so.

The longer term picture of winners and losers is much harder to predict; however, there are questions which many knowledgeable people are asking. Here are just a few:

• Can the Pennsylvania Insurance Commission effectively regulate such a huge entity?
• If competition decreases, will Blue Cross Blue Shield become less responsive?
• If a Blue Cross Blue Shield consumer has a complaint, will they have any leverage for a successful resolution?

Feel free to call me (1-888-323-8832) or e-mail me at quotes@lowcostpahealthinsurance.com.