Harvard Pilgrim, Tufts Health Plan Merger

BOSTON — The second- and third-largest health insurance companies in Massachusetts are looking to merge. Tufts Health Plan and Harvard Pilgrim Health Care are expected to announce their plans Tuesday.

WBUR’s Martha Bebinger joined Morning Edition Tuesday to explain what’s at stake and how a merger could affect us.

Bob Oakes: Why would Tufts and Harvard Pilgrim do this? What’s in it for them? To what extent are they driven by the need for leverage against Blue Cross?

Martha Bebinger: Size and leverage. Blue Cross, with about 3 million members, dominates the health insurance market and sets the agenda, whether that’s on how much providers are paid or how they are paid. Even combined, Tufts and Harvard Pilgrim would still be just under 2 million members, so about two-thirds the size of Blue Cross. But these two highly rated insurance companies would be in a stronger position to challenge Blue Cross for members and have more leverage in negotiating prices with hospitals and physicians.

This comes against the backdrop of a big push to lower health care costs. How does it fit in with that?

That’s a motivation here. Harvard Pilgrim and Tufts have been moving in this direction as they negotiate contracts with hospitals and physician groups, but Blue Cross has taken the lead in what’s seen as the wave of the future.

Harvard Pilgrim and Tufts executives don’t like that — it seems Blue Cross is once again, perceived to be, if not really, setting the agenda here. Again, size is important here. A merged Harvard Pilgrim and Tufts would have more leverage to say to providers, “This is how we want to do business.”

Maybe the most important question for people listening on the other end of the radio this morning: What about consumers? How would they be affected?

More competition could rein in rising premiums. It also means one less choice. On the other hand, many employers aren’t offering all these plans as an option in Massachusetts any longer, and nationally, the standard is generally two, not three viable insurance plans.

What happens next?

The planned merger will be reviewed by the state attorney general and the Division of Insurance, both here and in the other New England states where Tufts and Harvard Pilgrim do business. There may be some federal oversight.

The immediate next step is telling employees, most of whom are waking up to this news this morning that one of their competitors may soon be under the same roof.

Please follow our community rules when engaging in comment discussion on wbur.org.
  • JARieber

    Result – higher policy costs, higher co-pays, higher deductibles, less service, poor prayment to providers (the people who bear the liability and responsibility to patients) more money in the pockets of the corporate swine.

  • Paolo

    Hooray, perhaps a big first step to a one payor system!

  • Moodscapes

    All I know that I am self employed and paying to much for health care. I have BC and was considering another plan with a larger deductible. How does this help me

  • Anna

    Coverage is not care. We all have bodies and they all, cradle to grave, need maintenance. Insurance has nothing to do with it. We need single-payer and we need it now. HR 676, Medicare for All, will eliminate the 31 cents on every dollar wasted on private health insurance bureaucracy, the parasitic middlemen that enrich their execs, increase costs for the rest of us and deny or delay care to patients. HR 676 will implement a single-payer system that will capture the savings and deliver comprehensive, high quality health care to everyone….at a savings of $400 billion ANNUALLY. It’s time. No more ‘it’s not politically feasible’ excuses!

  • Devonwinston

    All we hear is how these companies are “working” on lowering costs but nothing has been done. How much longer must we wait? I personally pay way to much for insurance and then cant even use it because I have such a huge deductible that i cant afford to pay the bills when they come in. So basically I suffer with pain and illness and can not afford to be treated yet i am paying absurd healthcare costs. Please tell me when I can expect to “pay less”

  • lotsbadinfo

    Anna and JARieber – you both have facts or assumptions wrong.

    Non-profit health plans in the state of MA (like BCBS, HPHC and THP) generally operate around 88 – 92 % medical cost ratio. That means that for every premium dollar you pay, roughly 90 cents goes directly to pay providers for medical care.

    Residents of MA actually already had a lot of the benefits of health care reform prior to the national law that passed last spring.

  • ginger

    Nationally, health insurance companies have lowered psychologists fees by 30-42% since 1995. Premiums have gone up by 200% during that same time period. HMO’s control their provider pools to include mental health clinicians who charge the lowest fees. Mental health providers are prevented from negotiating as a group because of “anti-trust laws”. What does this mean? That boutique mental health care for those with money is the wave of the future. The rest of the populace will have catch as catch can; if they can find a provider nearby with whom they can have a relationship that works to heal.

  • ginger

    Nationally, health insurance companies have lowered psychologists fees by 30-42% since 1995. Premiums have gone up by 200% during that same time period. HMO’s control their provider pools to include mental health clinicians who charge the lowest fees. Mental health providers are prevented from negotiating as a group because of “anti-trust laws”. What does this mean? That boutique mental health care for those with money is the wave of the future. The rest of the populace will have catch as catch can; if they can find a provider nearby with whom they can have a relationship that works to heal.

  • ITConsultant

    As a seasoned IT health care professional, going on three decades of experience, I can tell you that there is much cost savings to be had on the info tech side for both TAHP and HPHC. I have been employed by both. A merger done correctly on the IT side with the right platform and people will save millions yearly. As both being non profits, it is had been sickening to see how both organizations have been mis-manged in their infrastructure services etc. etc. over the past two decades. Witnessed the Pilgrim merger, the HCHP computer debacle, the Receivership, bad choices on platforms (HPHC is currently running its core insurance application on obsolete computer system which is no longer supported by Hewlett Packard!!) but one of my pet peeves is the mis-management of people at both organizations. There are too many employees at both that are paid very well to cruise the internet,talk on the phone all day socializing, work from home and do nothing, walk around all day looking for a free lunch, disappearing for hours or just coming in for a hour or two and leaving for the day etc. etc. etc. Dead wood needs to be trimmed. Computers were suppose to make us all productive and cut cost not create useless and meaningless jobs funded by HMO members. I hope whoever ends up running the merger show brings in NEW management to fix the IT side of things and make it lean and mean!

  • EK

    My HPHC COBRA coverage is about to expire. The only next option for me is BCBS of MA but their prices are just outrageous: the least expensive plan is almost $500 per month with 20% co-payment for each service/visit and $2900 deductible!!! Is is going to get worse? Are there any other reasonable options?

  • Anna

    to lotsbadinfo….Read EK and Devonwinston. Read Moodscapes. Coverage is NOT care. They have coverage and can’t access it. Why? High deductibles and high copays. The coverage is bogus.

    • lotsbadinfo

      Your point ignores the underlying issue of health care costs. Costs are not driven by the insurance companies, costs result from state of the art treatment options available in greater Boston. Single payer won’t change that cost curve – the 8 – 12 % that is currently spent to administer the plans and process claims will still need to be spent in a single payer system.

      The MA healthcare reform laws of 2006 cap the deductibles allowed and provide subsidies for coverage to those that qualify.

      How much should it cost and where does that money come from? I’m open to the idea of single payer (the idea that health insurance should be tied to your employer is one that never really made sense to me), but I don’t think that it’s a magic elixir that will suddenly result in access to low cost, high quality care on demand.

      • Anna

        We can solve the healthcare crisis by taking healthcare out of the marketplace and putting it in the hands of a single public agency such as the one that runs the Medicare program so efficiently. Medicare operates with approx. 3% overhead, compared to the 15 to 30% overhead of the private insurance plans. By doing so, patient care and health come first, not the insurance company profits. This is where you save $400 billion annually…enough to cover all of the uninsured with comprehensive healthcare. With the current system, there are literally tens of thousands of different healthcare organizations-HMO’s, billing agencies, etc., generating a lot of administrative waste. In a single-payer system, all hospitals, doctors and other healthcare providers would bill ONE entity for their services….and saving a lot of $$.
        How to pay for it? More details are on the website I cited earlier but basically, replace all employer contributions to private insurance premiums with a modest payroll tax of 4.5%(in addition to the current 1.45% that’s paid towards Medicare), eliminate all individual premiums, co-pays, deductibles and nearly all other out-of-pocket costs, and replace with a modest payroll tax of 3.3% (plus the current 1.45% for Medicare) and lastly, relieve the state and local gov’ts of the immense burden of paying insurance premiums for medical coverage for their current and retired employees- replacing it with a modest payroll tax of 4.5% (plus the current 1.45 % for Medicare).
        To summarize, Medicare for all. Use the provider network that already exists for 65+ year olds and extend it to everyone. No, it’s not ‘socialized medicine’. Doctors are not gov’t employees like the VA system. They are still independent. It’s publicly funded, privately delivered care for ALL Americans!

        • lavedon

          Local insurers in Ma operate on an administrative budget of around 10%, which includes margin of typically less than 2%. 90%+ of every premium dollar is used toward actual medical services. Administration includes services such as claims adjudication, auditing, care services, customer service, etc. Careful what you wish for on having government run healthcare. Do you really think a Medicare-like model is the answer? If so, why is CMS making such significant cuts to providers relative to Medicare reimbursements and looking to cut benefits? The quality of healthcare in Ma would be jeopardized with what you propose. Having consumers pay an additional tax of 4.5% would do what? Where would the consumer have some skin in the game? Consumers would go from thinking an ER visit costs $50 to thinking it’s free. We need transparency and accountability for consumers. Government systems seem to enable consumers to feel entitled, we should all be responsible consumers. I am on an HSA plan and I use my plan very responsibly, I will always look to use tier one drugs for me and my family as opposed to the higher tiers, as the costs are much higher. I also make every effort to not take my kids to the ER, unless they obviously need to be seen in an ER facility. When I was recently on a plan that was more traditional with very modest copays, I didn’t pay attention to the various tiers on pharmacy and I viewed going to the ER as a legitimate option as opposed to going to my kids’ pediatrician, cost was not a factor to me. The difference was only $20. Government run systems scare me and should scare you.

  • duzsizmattr

    So anyone who suggests that a single payor system is the solution doesn’t get it. How does a single payor system control costs? All local health plans are non-profit. Most operate (with investment income) at an overall slight loss or gain. For every dollar spent, about 88-93% is used toward actual medical costs and the remaining amount is used toward administration. Administration is what carriers use to pay claims, enroll members, negotiate deals with providers, manage fraud, waste and abuse and work with providers to more effectively manage its members’ care from a cost/quality standpoint.

    Do we want government to manage our healthcare system? I believe the government has its own issues with State and National debt. Medicare cuts are here and appear to be trending upward. The government solution is to prop healthcare and make it look affordable and apply a “hidden tax” to help subsidize. This would be counter to having a system that offers transparency, actual medical costs, pharma costs, carrier deals with providers, carriers and providers margins and reserves, broker compensation, etc. Consumers should know all of this.

    The Government’s role should be to effectively regulate, not own healthcare. The government should be advocating for full transparency on all of the above-mentioned examples. The government needs to control the unit cost negotiations between all providers and carriers. Tort law is desirable assuming that the government is able to protect providers by establishing care management standards which provide acceptable protocols for managing patients who receive care for routine services to those receiving care for high impact health conditions. The government does tightly regulate carriers, but I see little, if any oversight with the medical and pharma providers.

    A merger between Tufts and Harvard provides scale, and that’s all. Merging two very different organizations will be disruptive and messy. Merging on the basis of scale doesn’t address the problem of effectively managing the rising costs of healthcare; scale is only used to squeeze providers, now that is innovative…

    Is the merger talk an effort to move the State to a single payor system? Jim Roosevelt and Deval Patrick are Democratic buddies, hmmm. and I believe Deval and Obama are buds too, hmmm… or, could the merger be a pointed threat toward BCBSMA in an effort to show them that someone has figured out a way to knock the 800 pound elephant on its ass? Or, is it simply a business deal that allows for scale of size and you now have two very large plans battling only to trade business and not address the fundamental issues with healthcare, which is managing overall costs and the quality of its members. I think this may create an opportunity for plans like Fallon Community Health Plan and Health New England, as they have an identity in their respective markets and seem to get it more than the larger carriers, particularly when it comes to innovation.

  • Anna

    duzsizmattr and others: I urge you to read the bill at http://www.healthcare-now.org/hr676/
    It will answer your questions and clear up any misconceptions you have.
    The United States is the ONLY industrialized country in the world that does not have universal health care. It affects our collective health and our economy. It’s time to fix it!

  • duzsizmattr


    I believe that South Africa and Singapore still have private health insurance and are not socialized. My understanding if socialized medicine is that you are at the mercy of the availabilty of specialists. Many have to wait months for a test. Many don’t ever have the test if you know what I mean. I agree that it is time to fix healthcare, but putting it in the hands of a near bankrupt government does not sound sensible. Obama is looking at what is transpiring in Massachusetts and using our state as a beta for the nation.

    • Anna

      Single payer is not socialized medicine. Under socialized medicine, like the Veterans Administration, doctors are gov’t employees and hospitals are owned by the gov’t as well. With single payer, doctors are like they are now, independent. It’s simply a financing term that refers to one entity acting as the administrator, or ‘payer’. So, it’s publicly financed, privately delivered health care. Like Medicare for 65+ year olds, only it would be extended to all citizens. I urge you to check out http://www.healthcare-now.org for more detailed information.

Most Popular