On February 19, two Pennsylvania Blues – Blue Cross of Northeastern Pennsylvania and western-Pennsylvania based Highmark – announced plans to merge. Under an agreement submitted to the Pennsylvania Insurance Department for approval, Highmark, which currently serves approximately 4.5 million Pennsylvania residents, would add over 500,000 new Blue Cross of NEPA members to its insured ranks. The transaction would reduce the number of Blues in Pennsylvania from four to three, which is still a larger number than in other states (only five states have more than one Blue entity in their state).
The transaction requires both Insurance Department and federal and state antitrust approval before it can be completed, and is notable because it is Highmark's first merger attempt in Pennsylvania since its failed attempt to combine with Philadelphia-based Independence Blue Cross in 2009. That transaction was approved by federal antitrust regulators, but the parties ultimately gave up on the deal in response to a very lengthy investigation by state regulators. Whether this transaction will face similar obstacles, at either the federal or state level, remains to be seen. Stay tuned.
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