Independence Blue Cross, Highmark announce merger

The union of the two Pennsylvania plans creates a nonprofit giant, and efforts are under way to fight the deal.

By Jonathan G. Bethely, AMNews staff. April 16, 2007.

The merger of Highmark Inc. of Pittsburgh and Independence Blue Cross of Philadelphia creates not only a dominant health plan in Pennsylvania but also one of the biggest health plans in the nation.

The two nonprofit Blues carriers on March 28 announced they would merge, ending about two years of talks. The newly formed company -- which does not yet have a name -- would insure 7.1 million out of 12.4 million Pennsylvanians.

The combined 2005 revenue of $20.4 billion puts the company among the top five largest health plans nationwide, for-profit or nonprofit. That revenue total would also make the company the nation's largest nonprofit Blues carrier, beating out Blue Cross Blue Shield of Michigan, which had $15.3 billion in 2005 revenue. The merged company has said it is committed to remaining nonprofit.

Highmark operates mostly in western Pennsylvania, while Independence operates mostly in the eastern part of the state. But the plans have a long history of working closely with each other, including an arrangement to jointly sell a Medicare prescription drug plan.

Among many in Pennsylvania, the Highmark-Independence deal was greeted with trepidation long before it happened.

The merger was such a hot topic among Pennsylvania physicians and others in the state last year that Sen. Arlen Specter, (R, Pa.) decided to chair a Senate Judiciary Committee hearing on the impact of megamergers. It was the first time physicians, including the AMA, got a formal legislative audience in Washington to air their concerns about health plan market dominance.