Biden not happy with health care merger

Bryan Cohen Jan. 3, 2012, 2:32pm


WILMINGTON, Del. (Legal Newsline) - Delaware Attorney General Beau Biden released a statement on Friday following the Delaware Department of Insurance's approval of a proposal affiliation between BlueCross BlueShield Delaware and Highmark Inc.

Insurance Commissioner Karen Weldin Stewart signed off on a merger deal between the two companies that was first announced in August 2010. The merger connects Delaware's largest health insurance provider with the much larger Pittsburgh health insurance giant Highmark. Blue Cross serves approximately 400,000 customers while Highmark has 4.8 million subscribers, Delaware Online reports.

"This affiliation is a bad deal for Delawareans and should not have been approved," Biden said. "BlueCross Shield of Delaware has a veritable monopoly on healthcare in our state, covering approximately 400,000 Delawareans. Delawareans' healthcare will be run out of Pittsburgh, Pennsylvania. Executives in Pittsburgh will determine the cost and quality of the health care Delawareans receive."

Blue Cross pursued the deal to gain access to Highmark's more modern information technology systems suite. It will pay annual fees to Highmark for IT access and will keep its Wilmington headquarters and, at least temporary, its leadership team. While Blue Cross will remain a separate entity, Highmark will gain control of the board and exert influence over the local company.

"Delaware granted tax breaks to BCBSD for 75 years," Biden said. "Now BCBSD is taking the $45 million in reserves it accumulated as a result of that subsidy to Pennsylvania. The insurance commissioner should have at least required that an independent foundation, not one controlled by BCBSD and Highmark, be established to ensure that the $45 million in reserves stay in Delaware for the benefit of Delawareans."

The affiliation approval comes with 49 conditions, including giving Stewart's office oversight of payments sent from Blue Cross to Highmark, an orderly unwinding of the deal should the relationship sour and the expansion of children's health insurance statewide.

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