BOSTON Harvard Pilgrim Health Care and Tufts Health Plan announced in a joint statement on Tuesday that they have signed a non-binding memorandum of understanding “to explore the benefits of merging.”
The agreement is the first step in a long review process, with a final decision expected within the next several months.
Both companies say a merger could improve efficiency and help control costs. Health care advocates and analysts said it’s unclear what the merger could mean for consumers and costs.
Brian Rosman, research director for Health Care for All, says the merger could give the insurers more power to negotiate with hospitals and doctors.
“But if you’re patients, I’m not sure it’s going to make too big of a difference,” Rosman said. “Both plans have quite outstanding records in terms of quality of care. Both plans have the same broad networks that overlap for the most part.”
“It may be that a merged entity will be able to influence some of the costs and provide some savings to its members,” said Rosman’s colleague, HCA Executive Director Amy Whitcomb Slemmer.
The proposed merger would unite the state’s second-largest insurer, Harvard Pilgrim, with the state’s third largest.
Boston University School of Public Health Prof. Alan Sager says the insurance companies are jockeying for stronger market power.
“It’s movement without progress, and there’s no guarantee of lower cost, better care, better quality,” he said.
The state’s biggest insurance company, Blue Cross Blue Shield of Massachusetts, says it welcomes competition.
“The central question in the community today is, how do we, as a community, reduce the growth in health care costs, and I think that will be the measure by which the community considers this particular transaction,” said BCBS spokesman Jay McQuaide.
Should it go forward, state regulators would examine any merger proposal for how it affects consumers and health care costs.