Harvard Pilgrim Health Care & Tufts Health Plan: Merging?

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Tuesday, February 01, 2011

GoLocalProv Health Team

Last week, Harvard Pilgrim Health Care and Tufts Health Plan announced in a joint statement they have signed a non-binding Memorandum of Understanding ("MOU") to explore the benefits of merging their nonprofit health plans. Blue Cross & Blue Shield of Rhode Island remains the biggest health insurer in the state, and UnitedHealthcare of New England also has a significant subscriber base. Massachusetts-based Tufts, which had a small base more than a decade ago, re-entered the Rhode Island market in 2008 and has slowly gained market share. Harvard Pilgrim Health Care, however, has not had a presence in the Ocean State since its departure in the 1990s.

"A responsible approach..."

According to the companies, combining resources would potentially result in far reaching cost saving benefits for subscribers. Exploring a merger was described as, “what is likely to be a lengthy examination by their respective management teams and boards of directors, as well as numerous regulatory bodies.” James Roosevelt, Jr., president and chief executive officer of Tufts Health Plan, said in a statement, “Exploring a merger of two evenly matched, like-minded organizations is a responsible approach in an environment of unsustainable increases in health care costs. There is compelling reason to believe that a combined new organization has great potential to reduce costs, which will contribute to slowing the growth of escalating premiums while increasing the focus on improving health care quality in partnership with providers.”

Commissioner Koller Weighs In

When asked about the potential merger, Rhode Island’s Health Insurance Commissioner, Christopher F. Koller, commented, “Tufts is licensed to do business in Rhode Island and is subject to RI statutes. Because it is based in Massachusetts, we rely on the Massachusetts Department of Insurance to assess its financial solvency and we asses its compliance with consumer protections and standards regarding fair treatment of providers and system improvement. For now none of that changes. We are still analyzing RI statute to determine our oversight responsibilities if and when a merger was announced, but anticipate any review we do would be secondary to that conducted by the State of Massachusetts and federal officials.”