Pittsburgh-based Highmark Inc. will take over Blue Cross of Northeastern Pennsylvania.
Highmark secured regulatory approval from the Pennsylvania Insurance Department on Monday, which was needed for the acquisition.
The combined company will operate as Highmark Blue Cross Blue Shield and will assume coverage for the 550,000 people in the 13 counties of Northeast Pennsylvania. Highmark officials said benefits for those people will not change in the near term.
“This merger is a natural progression of the successful business relationship that Highmark and BCNEPA have maintained for decades to best serve the health care needs of the residents,” said Highmark President Deborah Rice-Johnson. “We anticipate continued success in the region and look forward to providing our members with improved quality, accessibility and affordability of health care.”
Highmark is among the 10 largest health insurers in the United States, insuring 5.3 million in four states.
Those insured by Blue Cross of NEPA should not expect big or immediate changes, said Daniel West, Ph.D., a professor of health administration at the University of Scranton.
The greatest fear among the insured may be increased premiums. However, West said the company would keep premiums competitive. If Highmark hikes premiums, it would do so in response to economic forces or the amount of risk they have taken on, he said.
“It wouldn’t make sense for Highmark to come to the region and price themselves out of the market,” West said. “They’ll have to be competitive. If they plan on making changes, it will take a while.”
One plus for customers may be an expanded slate of insurance plans and products that Highmark can now roll out in its new service area, probably in an aggressive fashion.
“A bigger company will have more and different products,” West said. “You will see a more aggressive marketing approach to capture the market and introduce those products.”
Although the company has a new name, former Blue Cross members can still call the number on the back of their member identification card to reach a member services representative if they have questions about coverage or need other assistance, corporate spokesman Anthony Matrisciano said.
“We don’t expect any interruptions with service to our members,” he said.
Physicians may also have concerns dealing with a company that has a reputation for hardball tactics, including a years-long war with 700 physicians at the University of Pittsburgh Medical Center.
Any concerns are probably overblown, said Justin Matus, Ph.D., an associate dean at Wilkes University.
“Look, this is business and business is always hardball. It’s unfair to single out Highmark of all the players in health care,” he said. “People naturally fear change and the unknown, but the fears won’t match the reality.”
One reality, Matus said, likely will be eventual job losses, as Highmark eliminates duplicate jobs or consolidates to save money.
For its part, Highmark agreed to maintain operations and “substantial” staffing levels in the region.
Asked whether a reduction in workforce is anticipated, Matrisciano said the merger agreement maintains staffing levels in Northeast Pennsylvania and Highmark plans to honor that commitment.
As of February 2014, Blue Cross employed about 750 people in the region.
While Highmark expects the acquisition will result in savings, premium payers should not expect a windfall.
“Health care costs are climbing and will continue to climb,” Matus said. “I don’t see that changing and I don’t see people getting any sort of a big break.”
Immediately prior to the merger, Blue Cross of NEPA made a $90 million contribution to the AllOne Foundation and AllOne Charities to support health and wellness efforts across northeastern Pennsylvania.
According to documents filed with the state, Blue Cross of NEPA president and chief executive officer Denise S. Cesare, could get as much as $3.2 million under her employment agreement as a result of the merger.
Date: June 1, 2015