Highmark Inc. and Independence Blue Cross say they have given up on efforts to combine their operations.
Highmark, Pittsburgh, holds the Blue Shield license for central Pennsylvania, and it holds the Blue Cross and Blue Shield licenses for western Pennsylvania. It provides health coverage for 4.6 million people.
Independence Blue, Philadelphia, which holds the Blue Cross license for southeastern Pennsylvania, covers 3.4 million people.
Together, the companies provide coverage for about 70% of all Pennsylvania residents.
The companies applied to the Pennsylvania Insurance Department for permission to merge back in April 2007.
Critics of the combination have argued that it would reduce the level of competition in the Pennsylvania health insurance market.
Antitrust regulators at the U.S. Department of Justice have approved the combination, but members of the Pennsylvania Senate Banking and Insurance Committee recently voted 10-4 to send the Pennsylvania department a message urging it to reject the deal.
The Pennsylvania department told the companies that, if they combined, they would have to stop using either the Blue Cross brand or the Blue Shield brand.
“Throughout the review process, we have stated repeatedly that we would not give up one of our brands,” Dr. Kenneth Melani, Highmark’s president, and Joseph Frick, Independence Blue’s president, say in a joint statement. “We have spent more than 70 years developing our brands’ value in our markets and they are an integral part of our corporate identities and reputation.”
Rather than giving up one of the brands, Highmark and Independence Blue will move forward as “separate, financially stable, Pennsylvania-based companies,” Melani and Frick say.