Committee Approves House "Blues Merger" Bill

HB 112 would provide state oversight of non-profit insurers

The Senate Banking and Insurance Committee on Wednesday (May 2) amended, and sent on to the full Senate, House Bill 112. The bill contains legislation that would provide for state oversight of proposed mergers involving non-profit health insurance companies, according to Senator Don White, Committee Chairman.

House Bill 112 is the companion bill to Senate Bill 550, a measure introduced by Senator White that was approved by the Senate on March 28. Both SB 550 and HB 112 would confer essential oversight powers to the state in cases involving the mergers of non-profit health care insurance companies such as the pending deal between Independence Blue Cross and Highmark.

"Since the announcement of that proposed merger, we have seen a growing groundswell of concerns within the Legislature and in our communities," Senator White said. "Barely a day goes by without another article or editorial appearing in newspapers across the Commonwealth raising new and increased concerns about the potential liabilities posed by the merger and potential creation of the third largest insurance company in the nation. This merger certainly raises serious questions and thus far we have seen few answers."

HB 112, as approved by the House, preserves the Attorney General's authority regarding oversight of charitable organizations and enforcement of federal antitrust laws and establishes a restructuring board empowered to review and provide written recommendations to the Insurance Commissioner. It also states that the Insurance Commissioner may not approve the consolidation of a Blue Cross/Blue Shield plan without the prior written recommendation of the board.

Prior to the Committee's approval of the HB 112, Senator White offered an amendment, which made the following changes:

Added the Auditor General or his designee as a board member, increasing the board membership to nine.
Specifically required that the Governor's appointee must be a member of the general public who is a policy holder of a hospital plan corporation or professional health services plan corporation.
Required a vote of 7 members to approve a recommendation or determination that the merger is in the public interest.

Required the Insurance Department make a determination that the merger is in the public interest. Required approval of that determination by the board.

And, included a retroactivity clause wherein the act shall not apply to any merger, consolidation or other acquisition of control made or consummated prior to January 1, 2007.

"Today, we took a vital step toward providing essential oversight of mergers that impact the lives of so many Pennsylvanians," Senator White said. "However, the job is not finished and I expect there will be further discussion and refinement of this legislation as the process moves forward."

Contact:

Joe Pittman
(717) 787-8724