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More Health Insurers Merge

Posted on: Monday, 3 October 2005, 06:00 CDT

By Carrie Mason-Draffen

Merger mania continued in the health-insurance industry Thursday with Group Health Inc. and HIP Health Plans of New York agreeing to combine their operations.

In a statement that touted their decades-long presence in the industry, the two Manhattan nonprofits said their combination will produce the largest health insurer based in New York State, with more than $7 billion in revenue.

"Our operations are highly complementary," said Anthony L. Watson, HIP chairman and chief executive. "And our combined advantages will provide current and new members with an innovative level of access to the best health care possible."

But not every one is thrilled with the prospect of another industry merger, especially in the run-up to a new benefits enrollment season when employees with health coverage at work must choose their provider for the 2006.

"Usually these kinds of things are not in the best interest of the employers who are paying the bills for their employees," said Laurel Pickering, executive director of the New York Business Group on Health, a 170-member group that represents employers in the New York area. "They dilute competition and provide less choices. And when there is less competition and less choice, the customer has less clout and less of an ability to negotiate."

Just days before the latest announcement, WellPoint Inc. in Indianapolis announced a $6.5 billion deal to buy WellChoice Inc., the Manhattan company that runs the Empire Blue Cross Blue Shield plans.

And analysts expect the industry's rising costs to spur more consolidation.

Source: Cincinnati Post

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