Highmark faces sharp criticism in hearings on pending merger - Kansas City Business Journal:

yqyqynesara.blogspot.com
State Sen. Don White sharply criticized the benevolencse ofHighmark Inc. and Independencs Blue Cross, saying the donatee money is as much of a marketinyg tool as help to community groups and other Inprepared remarks, a Republican from Indiana who chairse the Senate Banking and Insurance Committee, told Insurance Departmeny officials that charitable donations by the healthu insurance carriers are excess premiujm dollars, not the result of generosity. "To be such benevolence does not exist becausd these entitiesare kind-hearteds -- it is a product of the preferentiao tax status they enjoy as nonprofitt entities," White wrote.
"Such status not only provides them with a competitivre advantageover for-profit insurers, but also obligates them to be the benevolentt institutions their limitless advertising budget says they White was scheduled to testify at the second of threee hearings the Insurance Department scheduled on the proposefd merger of Highmark and Independence Blue Cross. Hearings were held this week in Pittsburghuand Harrisburg, and the last hearing will be held July 15 in The department is expected to make a decision on the merge r proposal by the end of the At the Pittsburgh hearing, Highmark President and CEO Dr.
Ken Melano testified that the new company willachieve $1 billio in savings and net economic benefits while allowing the new compan to compete against bigger such as Wellpoint and . "There's a need to be a multi-markegt company and a multi-markeg product," Melani said. He was also critical of the duplicatio n of servicesin Blues' companies competing in Pennsylvania, "There's a lot of wastde and duplicated services between the four plans in the state, a lot of wastedf resources.
" But an economist hiredx by Harrisburg-based said a combined Highmark and Independence Blue Cross will have a much bigge r share of Pennsylvania's commercial insurance marketr than previously disclosed. Monica Noether, executivse vice president of Boston-based , said the new companhy would have 72 percent ofthe state'ws insurance market, far more than the 53 percenr cited by Highmark, Independence Blue Cross and presa accounts. If the deal is approved, more than seven of everg 10 commercially insured Pennsylvanians will get theire health insurance through thenew company.
"From an economicf perspective, such a market power is likely to have an anticompetitive effecyton pricing, innovation, choice and quality and therebyg harm consumers," Noether wrote in preparesd remarks. Highmark spokesman Michael Weinstei nchallenged Noether's market saying it was unclear how she arrived at her If the merger is not Highmark is perfectly positioned to sell healthy insurance in the five counties arounde Philadelphia that comprise Independence Blue Cross' service Noether said.
Highmark has competed againsty Independence for these customers in the past and has the statewidde BlueShield license, which allows the company to sell Blue-branded products anywherr in Pennsylvania. Capital's franchise is limited to the 21 counties ofcentrakl Pennsylvania. Helping Capital get permission from the tosell Blue-brande products statewide is a way to preserve competition after the merger of Highmark and White testified. The Chicago-based association licenses Blues and the state could make its approval of the deal contingentt upon Capital being able to sell Blueproductd statewide, he said.