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Capital BlueCross CEO Says Meaningful Statewide Competition Must Be Key Criteria in Pennsylvania's Review of Proposed Highmark-IBC Merger
Date:1/30/2008

HARRISBURG, Pa., Jan. 30 /PRNewswire/ -- State officials should only approve the proposed merger of Highmark and Independence BlueCross if conditions are attached to enhance health-insurance competition in Pennsylvania, Capital BlueCross President and CEO Anita M. Smith said in state Senate testimony today.

Smith was asked by Committee Chairman Sen. Don White, R-41, to testify about the proposed merger through the lens of the uniquely competitive health- insurance landscape in Central Pennsylvania and the Lehigh Valley.

"The most vibrant health-insurance competition in Pennsylvania today is in the Capital BlueCross service area," Smith said.

"We have learned that competition is healthy. It improves efficiency, innovation, quality and price for consumers and communities in Central Pennsylvania and the Lehigh Valley," Smith said. "It gives more people more choices."

"This Committee has heard previous testimony that a Highmark-Independence Blue Cross merger would not reduce competition, because Highmark and IBC do not currently compete. This misses an essential fact," Smith said. "Highmark and IBC do not compete because they agreed not to compete in 1996. And now that non-compete agreement is expired. If they wanted, they could compete right now. Today. We could have vibrant competition between these companies in southeastern Pennsylvania this very minute. Their merger is their effort to make permanent their agreement not to compete. And they want you to help them do it."

"The importance of state government's decision cannot be overstated," Smith said. "If this merger is approved, without conditions to enhance competition, the rest of the state will be destined to what could become a permanent virtual monopoly. The vibrant competition that exists today in Central Pennsylvania and the Lehigh Valley will never reach the rest of the Commonwealth," Smith said.

"Great attention has been paid to the lure of this transaction -- a purported $1 billion, one-time economic benefit to the Commonwealth. I know this Committee will carefully review that figure. But it also should carefully review what it would have to give up for that money. Pennsylvania's health-insurance market will account for more than $500 billion over the next decade alone. So we respectfully pose the question -- is a one-time payment worth mortgaging the competitive future of this enormous and vital market?

"We believe the answer is no. But what is beyond debate is this: To approve this merger without competition-enhancing conditions would forever close the door on a competitive statewide health-insurance marketplace. Make no mistake: This merger is the Commonwealth's final opportunity. We either nurture vibrant statewide competition. Or we forever preclude it."

For a copy of CEO Smith's testimony, please go to http://www.capbluecross.com.

Capital BlueCross is an independent licensee of the Blue Cross and Blue Shield Association


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SOURCE Capital BlueCross
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