The most vocal — and possibly most unlikely -– critic of the proposed merger between Highmark Inc. and Independence Blue Cross in Pennsylvania has resigned abruptly, according to an IFAwebnews.com article. Neither now former CEO Anita M. Smith nor officials at Capital BlueCross, the Harrisburg, Pa.-based health insurer in Central Pennsylvania and the Lehigh Valley, would offer an explanation for her departure.

The timing, in the heat of the debate over the merging of Highmark and IBC, seems more than a coincidence. Since we don’t have the real reason or reasons for Smith cleaning out her office, I’m left to speculate. I have three-and-a-half theories.

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One of the worst jobs to have in insurance right now would be head of a managed care company. Okay, maybe the $3.9 million proposed salary for Pittsburgh-based Highmark Inc.’s CEO, Kenneth Melani, if Highmark Inc.’s merger with Independence Blue Cross is approved in Pennsylvania, would make it a bit easier to handle. But still, the world of managed care is in great flux and nowhere is it more evident than in the region’s Blues affiliates.

The nation’s health insurers don’t know what to do as medical costs spiral upward and people live longer. Add to that the growing calls for universal health insurance, even though there’s no way to afford it.

Each of these issues would in and of itself be a concern. But collectively, they present a perfect storm. Examples in the region show how health insurers are battening the hatches. Read the rest of this entry »

The recent news that Tokio Marine, Japan’s largest insurer, is buying Philadelphia Consolidated Holding Corp. and Philadelphia Insurance Cos. for $4 billion may mark the start of a buying spree for the industry. I’m willing to bet that this deal will be the first in a series of foreign acquisitions of American insurance companies in the near future.With the dollar worth nearly nothing inside, and, more importantly, in this case, outside the U.S. these days, buyers can purchase a lot of American insurance company with their foreign money. Couple that value of foreign money with the tremendous profits property-casualty insurers are amassing since Hurricane Katrina three years ago and it would seem that more of them are likely to become acquisition targets in the near future. The property-casualty market may be the only one, however, to generate foreign interest.The flat life insurance market might discourage acquisitions in that arena, and no one - probably not even some of the health insurers themselves - want to grab onto a health carrier right now with universal health and other reform proposals swirling around.I’ll bet at least two more of these foreign acquisitions will occur in the next six months. 

The CEOs of Independence Blue Cross and Highmark Inc. were emphatic that any condition of approval forcing them to give up either the Blue Cross (under which IBC operates) or the Blue Shield (under which Highmark operates) would put an end to their proposed merger, according to an IFAwebnews.com article.

Kenneth Melani of Highmark and Joseph Frick of IBC may have given Pennsylvania Insurance Commissioner Joel Ario an easy out, if he’s even interested in killing the merger. Here’s my thinking: Impose the one condition the CEOs oppose: abandoning either the Blue Cross or Blue Shield name mark. Then watch as the state’s two largest health insurers walk away from their deal.

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The circus is making three stops in Pennsylvania over the next two weeks as Pennsylvania’s insurance commissioner, Joel Ario, will serve as ringmaster as the sides debate, discuss, dispute, dissemble and distort the possible effects of a merger between Independence Blue Cross and Highmark Inc.

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