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For Immediate
Release
11/20/08
 
Senator White's Statement on Blues
Recommendations
Banking and Insurance Committee sending
comments to Insurance Dept.
Senator Don White, (R-41 and Chairman of the Senate Banking and Insurance
Committee) issued the following statement today (November 20) after his
committee approved its recommendations to the Department of Insurance regarding
the proposed merger of Highmark and Independence Blue Cross.
"Today the Senate Banking and Insurance
Committee finalized its recommendations regarding the proposed merger of
Highmark Inc. and Independence Blue Cross, essentially capping off an extensive
and comprehensive process that began in March 2007 when the proposed merger was
first announced.
"Immediately after that announcement, the
Banking and Insurance Committee developed, considered and approved legislation
that would provide essential state oversight of the Blues merger. Act 62 of 2008
represents a true victory for Pennsylvania's health care providers, consumers
and the smaller health care insurers who otherwise could have faced dramatic
consequences had the Highmark-IBC merger been permitted to proceed without
essential state regulatory review.
"Act 62 requires that any merger
involving the 'Blues' be approved by the Department of Insurance. The new law
also empowers the Senate Banking and Insurance Committee and the House Insurance
Committee to submit written comments and recommendations to the state Insurance
Commissioner.
"In compliance with our
responsibilities under Act 62, the Banking and Insurance Committee held two
public hearings, one in September and one in October, to give interested parties
one final opportunity to provide their thoughts, insights and opinions on the
merger proposal. Afterwards, a memo was sent to the members of the Banking and
Insurance Committee requesting that they submit their comments and
recommendations by November 3.
"With months of deliberations
completed and stacks of testimony and supporting documents at hand, we drafted
the recommendations that were approved by the Committee today and now will be
sent to the state Insurance Commissioner.
"First, is a recommendation that the
Insurance Department deny the proposed merger. Certainly that recommendation
should come as no surprise to anyone who has followed the proceedings of the
Banking and Insurance Committee and heard the presentations by Highmark,
Independence Blue Cross, their competitors, health insurance industry advocates,
consumers and even the experts retained by the Department to consider the impact
of the proposed merger.
"The prevailing themes throughout
the Banking and Insurance Committee's review were that the proposed merger would
further restrict, if not completely eliminate, any remaining competition in
Pennsylvania's health care insurance marketplace, while providing minimal – if
any – tangible benefits for policyholders and/or providers.
"With that in mind, the specific
recommendation to the Insurance Commissioner states:
The Committee believes the
proposed new corporation 'NewCo' affirmatively violates three of the seven
standards prescribed in the Insurance Holding Company Act which the Insurance
Commissioner is required to follow when issuing a final determination on the
proposed merger.
"First, we believe the merger would violate
standard 2 in that it would substantially lessen insurance competition in the
Commonwealth and create a monopoly therein.
"Second, we believe it violates
standard 4 in that the merger fails to provide tangible benefits to
policyholders and is not in the public interest.
"Finally, we believe it violates
standard 6 in that the merger is likely to be hazardous or prejudicial to the
insurance buying public.
"We have provided specific, detailed
information with the recommendation that supports the contention that the merger
violates those standards and we hope the Insurance Commission will concur with
that assessment.
"However, in the event that the Insurance
Department does not concur, we also submitted our second recommendation, which
calls on the Insurance Commissioner to set very specific conditions if the
Department is inclined to approve the merger. The proposed conditions are a list
of specific and in some cases highly technical caveats intended to protect
consumers, provide transparency, and ensure that the integrity of the health
care insurance provider network is maintained.
"In summary, the Committee's primary
recommendation is that the Insurance Commissioner should reject the merger.
The testimony we received over the past year reinforced concerns that
this merger could create a single, multi-billion dollar, mega-entity which could
crush what little competition remains in Pennsylvania's health care insurance
market. The very last thing we need in the Commonwealth, and in the nation, is
further limitation on the competitiveness in the health care insurance market.
There are real concerns that costs will skyrocket, quality of care will decrease
and the workforce will be stuck with the bill.
"However, if the Department moves to approve the
merger, the Banking and Insurance Committee strongly recommends that certain
contingencies be in place. Any approval must be contingent upon Highmark and IBC
justifying beyond a reasonable doubt that this merger will provide meaningful
and long-term benefits to the people they insure, the providers they reimburse
and the health care interests of Pennsylvanians at large."
Recommendation 1 (PDF)
Recommendation 2 (PDF)
Contact:
Joe Pittman
(717) 787-8724
Additional Information:
Healthcare
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