Big insurance merger being considered in Massachusetts

Excerpts from several Boston Globe stories follow. From Robert Weisman and Kay Lazar:

The leaders of Harvard Pilgrim Health Care and Tufts Health Plan said yesterday joining forces will give them the scale to expand across New England and beyond at a time when sweeping changes in the health care industry demand larger and more competitive players. […]

If Harvard Pilgrim and Tufts become a single company, Massachusetts would be left with just two dominant health insurers, both nonprofits. […]

“We’ll certainly give [the merger] a very hard look,’’ said Barbara Anthony, the state undersecretary of consumer affairs and business regulations. “There will be a vigorous review of all the criteria.’’

Among the criteria regulators will consider are whether a merger would lessen competition and increase prices for customers.

Tufts is the largest seller of Medicare Advantage plans in New England, while Harvard Pilgrim is strong in such areas as insurance for students and the self-employed. Blending the two would create a “formidable competitor’’ to Blue Cross Blue Shield. […]

Not only would a merger boost their bargaining clout with hospitals and other health care providers — which themselves are expanding through mergers and clinical affiliations — but the new company could cut administrative costs. […]

Stuart H. Altman, professor of national health policy at Brandeis University in Waltham, said the merger is inevitable and a sign of what will happen nationally. The federal health care overhaul, he said, will force insurers to operate more efficiently.

By Kay Lazar:

The bargaining clout of a larger company could help it negotiate better prices from hospitals, but one less major insurer might also mean consumers would have less choice and end up paying more, said officials of leading consumer and business groups.

“We feel strongly that continuity of care is vitally important to patient outcomes,’’ said Amy Whitcomb Slemmer, Health Care for All’s executive director.

Slemmer said that because both health plans typically receive high marks in national rankings of consumer satisfaction — Harvard Pilgrim has been voted the top health plan in the country since 2005 — she has confidence a newly merged entity would safeguard consumer choice.

But Slemmer, as did others, said she is concerned that the consolidation may mean less competition and ultimately higher costs at a time when leaders in Massachusetts and across the country are pushing toward cost controls.

If the companies go ahead with a merger plan, it will trigger a regulatory review that will include the attorney general and Division of Insurance. In a statement, Attorney General Martha Coakley said such a deal would have widespread implications for the health care market in Massachusetts.

“We will conduct a thorough review of the merger with an eye toward protecting consumers and ensuring that the new entity serves its charitable mission and conforms with antitrust law,’’ the statement said.

“Our office has been in contact with both Tufts Health Plan and Harvard Pilgrim Health Care, and we expect to receive a fuller briefing soon.’’

The state’s hospital association said a merger in an already consolidated insurance market in Massachusetts may “destabilize’’ the system by creating less competition and higher costs for patients.

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