Harvard Pilgrim, Tufts Health Plan MergerPlay
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.
This program aired on January 25, 2011.