Highmark Inc., the dominant health insurance company in Western Pennsylvania, is looking to merge with Independence Blue Cross, the dominant health insurance company in the Philadelphia region. In the interest of promoting more, not less, competition in the health insurance market, the companies should face tough questions from state legislators and federal officials as well as from medical professionals and health-care consumers.

It's hard to see how a merger of these two big insurance companies could be good for consumers. This is especially true with health care costs rising faster than inflation for the past decade or more — and with Pennsylvania already having higher health insurance premiums than many other states, due to lack of competition.

The state Insurance Department will be holding three public information hearings over the summer, in Pittsburgh, Harrisburg and Philadelphia, to hear comments about the proposed merger. And federal officials with the Justice Department will work with the Federal Trade Commission to continue a review of the proposed merger in terms of its impact on competition, and the increased power of the combined companies to dictate reimbursement rates to doctors and hospitals.

A combined company will create an environment less likely to foster the competition needed to reduce costs.

Joseph Frick, chief executive officer of Independence Blue Cross, disputes that argument and is quoted as having said, "We are not reducing competition because there is no competition between us." Frick points to the fact that the regions served by Highmark, in the western part of the state, and Independence, in the eastern part of the state, do not overlap.

That statement can be seen in a different light considering allegations that the companies had an agreement to not compete that is now expired. It appears that, rather than compete, which would drive down costs to consumers and lower profits at Highmark and Independence, the companies want to merge.

Anita Smith, chief executive officer of Capital BlueCross, based in Harrisburg, testified against the proposed merger before a state Senate committee. Smith told the committee that "Highmark and IBC (Independence Blue Cross) do not compete because they agreed not to compete in 1996. And now that noncompete agreement is expired. If they wanted, they could compete right now. We could have vibrant competition." Smith argued that the planned merger is nothing more than the companies' plan to have a permanent noncompete agreement, which will keep prices and profits higher.

Capital BlueCross had been a partner with Highmark for years, before a plan to merge the companies fell apart in 2001.

The American Hospital Association also opposes the planned merger. And Melinda Hatton, AHAgeneral counsel, notes that the allegations of an expired noncompete agreement are serious and "merit further inquiry."

In addition to overwhelmingly negative reactions to the proposed merger from consumer advocates, hospitals and doctors, the federal government reportedly has grown less friendly than in the past toward mergers that will reduce health care competition. Rising health care costs are a national crisis and there is no doubt that health insurance companies' costs — and profits — contribute to the costs.

Higher health insurance costs for individuals as well as employers also were cited by Mark Piasio, M.D., MBA, president of the Pennsylvania Medical Society, in opposing the planned merger. Piasio noted that "many large Pennsylvania insurers are posting huge profits and surplus reserves, premiums continue to skyrocket (Pennsylvania has some of the highest premiums in the nation), and patient cost-sharing continues to increase without any increased benefit."Piasio made his comments to a committee of the U.S. Senate, chaired by Sen. Arlen Specter.

Given all the opposition to, and serious questions about, the proposed merger of Highmark and Independence Blue, state officials and the public should view the companies' planned combination with a very skeptical and critical eye.

It's hard to see any way in which this merger would benefit consumers or lead to a better health care climate in Pennsylvania. But Highmark is a large, wealthy and politically connected organization. And because of that, close attention should be paid to ensure that an anti-competitive merger is not muscled through, over the objections of everyone, other than Highmark and Independence executives.