Merger would limit insurance options for patients, leaving them vulnerable to increased premiums and benefit restrictions

For immediate release
July 31, 2008

WASHINGTON D.C. — The American Medical Association (AMA) testified today before the Senate Judiciary Committee in opposition of the proposed merger of Pennsylvania insurers Highmark and Independence Blue Cross (IBC), warning that it amounts to a monopoly and that mergers like this are a threat to health care delivery systems across the country.

 “Competition among health insurers leads to more affordable health care for America’s patients,” said AMA Board Chair, Joseph Heyman, M.D., regarding the AMA’s testimony. “The proposed merger in Pennsylvania would have negative long-term consequences for patients, physicians, hospitals and employers and clearance of this merger by the Department of Justice (DOJ) concerns us greatly.”

The DOJ has challenged only three of more than 400 mergers involving health insurers and managed care organizations over the past 12 years. As a result, markets for third-party payors – mainly commercial insurance plans – have grown increasingly concentrated.

“Contrary to claims of greater efficiencies and lower costs, patients are not benefiting from consolidation in the health insurance market,” said Dr. Heyman. “Dominant health insurers have posted historically high profit margins, yet patients see their premiums continue to rise without an expansion of benefits.”

The AMA noted that in Pennsylvania, where the market is controlled by Highmark and IBC, there are already high barriers to entry. National health insurers that compete in other parts of the country have barely any presence in Pennsylvania. This is consistent with federal antitrust regulators’ observations that national health insurers have been unsuccessful in entering some of the Blue Cross dominated markets. A merger of Highmark and IBC would give the new company a stranglehold on the Pennsylvania insurance market that will further inhibit competition and hurt patients.

"The proposed merger between Highmark and IBC highlights the alarming consolidation trend among health insurers," said Dr. Heyman. “The AMA has long cautioned that this trend is responsible for a growing insurance market imbalance where patients and physicians are left vulnerable to the demands of a few giant health insurers.”

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For more information, please contact:
Lisa Lecas
American Medical Association
(312) 464-5980

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