Consumer advocate sought in Blues merger review

MARTHA RAFFAELE – AP
http://www.philly.com

HARRISBURG, Pa. – Several consumer groups and a labor union that represents health-care workers want the state to appoint an independent consumer advocate to help review the proposed merger of Pennsylvania’s two largest health insurers.

The groups say such an advocate would ensure that consumers’ interests are represented as the state Insurance Department considers the possible marriage of Independence Blue Cross and Highmark Inc.

Without a consumer representative who could cross-examine the two nonprofit companies or call expert witnesses at merger hearings , a role similar to the state’s utility consumer advocate , the review process will shortchange the public, said Jonathan M. Stein of Community Legal Services of Philadelphia, a nonprofit legal-aid group that is representing the organizations.

“We need to see some real substantial public benefit coming out of this merger, and we don’t see it right now,” Stein said Thursday.

The groups made their request earlier this week in a petition filed with acting Insurance Commissioner Joel Ario, but they would like Gov. Ed Rendell to make the appointment, Stein said. They include the Philadelphia Unemployment Project, the Pittsburgh-based Consumer Health Coalition, and the Service Employees International Union state council.

Rendell said Thursday he saw no need to appoint a consumer advocate because he and Ario already represent policyholders’ interests.

“I’m not saying no, but I don’t think it’s necessary,” he said.

The department has scheduled public hearings on the merger in Pittsburgh, Harrisburg and Philadelphia next month, but it is willing to add more if necessary, said Rosanne Placey, a spokeswoman for Ario.

“We’re hopeful that they do in fact provide enough of an opportunity (for public comment),” Placey said. “If they do not, we’ll certainly look at other options.”

Having the opportunity to comment does not mean that the public will be entitled to an explanation of certain claims the Blues have made in favor of a merger , such as expected savings and revenue growth of $1 billion over six years, said Lance Haver, Philadelphia’s consumer advocate and one of the petitioners.

“I think I have a reasonable expectation that I can have answers to certain questions,” Haver said. “Does it mean people will be laid off? Does it mean certain lines of insurance no longer will be sold? Where’s the billion dollars going to?”

Independence Blue Cross in Philadelphia and Pittsburgh-based Highmark announced their intention to merge in March 2007. The consolidation would create the state’s largest health insurer, controlling more than 50 percent of the statewide market.

Federal regulators have already approved the deal, but the state must decide whether to allow a change in control of their for-profit subsidiaries before the consolidation can be completed. Ario has said he hopes to make a decision by the end of the year.

The insurance department does not have the authority to approve or reject the merger itself, and bills that would authorize it to do so have stalled in the Legislature.

Sen. Don White, R-Indiana, said Thursday he supports involving a consumer advocate in the merger review. As chairman of the Senate Banking and Insurance Committee, White has expressed concerns that a consolidation of the Blues would create a less competitive insurance market in Pennsylvania.

“We’ve never had a merger of anything of this magnitude,” White said.

On the Net:

Independence Blue Cross: http://www.ibx.com/

Highmark: http://www.highmark.com/

Pa. Insurance Department: http://www.ins.state.pa.us/

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