Harvard Pilgrim, Tufts to pursue merger
Combined entity would become strong rival to Blue Cross Blue Shield
STATE HOUSE NEWS SERVICE
TWO OF THE state’s largest health insurers on Wednesday announced plans to merge into a new, combined organization that Harvard Pilgrim Health Care and Tufts Health Plan said would serve nearly 2.4 million members in Massachusetts, Maine, Connecticut, New Hampshire, and Rhode Island.
The new organization has not yet been named, and company officials have not said where it will be based — Harvard Pilgrim is headquartered in Wellesley and Tufts in Watertown. The deal is subject to various state and federal approvals, and the two companies will remain independent during the approval process.
The deal, announced midday Wednesday, amounts to a significant consolidation in the Massachusetts health care insurance market, with two of the largest insurers joining forces and creating a single, larger rival to the state’s biggest insurer, Blue Cross Blue Shield of Massachusetts. Policyholders and consumers will be on the lookout for impacts on them, and the agreement will be also be vetted by government regulators.
Tufts Health Plan President and CEO Tom Crosswell will serve as CEO, and Michael Carson, currently the president and CEO of Harvard Pilgrim, will serve as president. Both organizations will be equally represented on a board of directors chaired by Joyce Murphy, who now chairs the Harvard Pilgrim board.
“Our communities and consumers today face four major hurdles in health care: affordability, access, quality of health and a fragmented health care experience across various stakeholders and health systems,” Croswell said in a statement. “Through our shared vision, we believe we can tackle these issues and bring more value to the communities we serve.”
The state’s top three commercial payers — Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim, and Tufts — account for nearly 62 percent of the private health insurance market membership, according to a Center for Health Information and Analysis report that used September 2018 data.
Blue Cross Blue Shield is by far the largest by membership, according to the report, with 1.6 million members in Massachusetts to Harvard Pilgrim’s roughly 500,000 and Tufts’ roughly 360,000.
“Consolidation in the health care industry is an overarching concern for consumers, as it can lead to increased costs for individuals and families,” Health Care For All executive director Amy Rosenthal said in a statement.
Rosenthal added: “We will closely monitor this proposed merger to better understand whether the anticipated efficiencies will actually translate to lower costs for consumers, broader networks and an increase in community investments. Health Care For All will also want to ensure that consumers can continue to see their providers and that Connector and MassHealth plans remain available as these changes unfold.”
Meggie Quackenbush, a spokeswoman for Attorney General Maura Healey, said Healey’s office has been in touch with both insurers and “will review the proposed transaction as more information becomes available.”
HPC spokesman Matthew Kitsos said the commission looks forward to learning more about the deal that “could have a significant impact on the Massachusetts health care market.”
Last year, Harvard Pilgrim had been exploring a merger with Partners HealthCare, the largest health system in the state.
The Tufts/Harvard Pilgrim deal was approved unanimously by both organizations’ boards, the companies said.Gov. Charlie Baker spent 10 years as Harvard Pilgrim CEO before stepping down for his 2010 gubernatorial bid.
“The Baker-Polito Administration believes that any merger of healthcare companies should result in greater transparency, lower prices and better outcomes for patients,” Baker spokesman Brendan Moss said in a statement.