A single company will have 60 percent of the health insurance market, statewide. Highmark has 4.6 million subscribers and 18,500 employees; Independence has 3.4 million subscribers and 9,500 employees. In 2005, Independence posted profits of $143.6 million on $10.6 billion in revenue; Highmark earned $341.6 million on $9.8 billion in revenue.

Integration of the two companies is a major step toward vertical monopolization of the health insurance industry, all the more so because the Blue Shield components of the businesses - dealing with health-provider contracts - are even more pervasive than the Blue Cross components.

Current Pennsylvania law exempts the companies - which technically are nonprofit corporations - from the state-level regulatory review that would accompany the announced merger of any for-profit insurers. Such reviews examine the likely impact of such mergers on rates, competition within the industry and the delivery of services.

Recognizing that the merger of the big Blues is likely to have a massive impact on the state's health insurance industry, the state Senate voted 48-0 this past Wednesday - the same day that the merger was announced - to make Blue Cross holding companies subject to such review.

That is crucial. The state must get a handle on how such a massive insurer, which would be the third-largest in the country, would affect competition and pricing for health insurance statewide.

And the deal could be the precursor to a trend that has accompanied the consolidation of health insurers - conversion of the merged company from a nonprofit to a for-profit entity.

That, too, could have some short-term positive effects. The company would have to dispense hundreds of millions of dollars it has accumulated, as a tax-exempt nonprofit, in ways that benefit the communities where it does business. But for-profit status also could make the insurer more aggressive in squeezing out competitors, controlling markets and having free rein over pricing.

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