Senate Sends Amended “Blues” Merger Bill Back to House

HB 112 would include review to ensure “sustained premium reductions”

The Senate today (Tuesday, May 22) approved House Bill 112, legislation to provide state oversight of proposed mergers involving non-profit health insurance companies such as Blue Cross and Blue Shield, and sent the amended bill back to the House for concurrence, according to Senator Bob Regola, Vice Chairman of the Senate Banking and Insurance Committee.

“This is an important measure to protect the thousands of individuals and businesses that could be impacted by the proposed Highmark-Independence Blue Cross merger,” Senator Regola said. “We have heard concerns raised that a merger of these major insurers – without the appropriate state oversight -- could potentially have a negative impact on the quality and availability of health care coverage in the Commonwealth.”

While the Insurance Department would hold final approval -- or denial -- authority for a merger of non-profit health insurance companies, House Bill 112 also establishes an Insurance Restructuring Public Interest Review Board comprised of the representatives from the Auditor General’s Office, the Administration, and the four caucuses of the General Assembly, as well as a policyholder to provide recommendations to the Department.

As a way to protect policyholders and businesses, House Bill 112 would require the Department of Insurance to develop a written determination that the merger or consolidation will result in a sustained reduction in health care premiums, according to Senator Regola. The Department’s written determination must also set forth the reasons why the transaction will be in the public interest, he added.

            House Bill 112 also includes a specific “good government” provision that prohibits any contract or agreement between the Commonwealth and Blue Cross or Highmark relating to the disbursement or spending of the proceeds from the merger or consolidation.  It also prohibits any spending from the restricted receipt account except upon appropriation by the General Assembly.

            Finally, House Bill 112 adds a new article to the Insurance Company Act that will require hospital plan corporations and professional health services plan corporations to report annually to the Department of Insurance and the House and Senate Insurance Committees all amounts spent on social mission and on advertising.