Two of the nonprofit, Boston-area carriers that helped to create the modern managed care industry say they intend to merge.
Harvard Pilgrim Health Care Inc. and Tufts Health Plan announced today that their boards have approved a definitive agreement that calls for the organizations to join together under one name.
The carriers say they have not yet chosen the new name.
Executives at the carriers say they believe the combined organization would get more out of its administrative spending, be big enough to negotiate better deals, and have more money it could invest in new customer service tools and capabilities.
Together, the two carriers now have about $8.4 billion in annual premium revenue and 2.4 million major medical plan enrollees in Connecticut, Maine, Massachusetts, New Hampshire and Rhode Island.
Harvard Pilgrim Health Care is a Wellesley, Massachusetts-based carrier that’s descended from a managed care company formed in 1969.
The carrier reported $80 million in net income for 2018 on $3 billion in revenue.
The carrier provided or administered major medical coverage for 1.2 million people. Annual revenue averaged about $2,500 per enrollee.
Harvard Pilgrim broke off merger talks with Partners HealthCare, a large Massachusetts hospital organization, in November 2018.
Harvard Pilgrim put its for-profit entities in a Delaware C corporation, New HPHC Holding Corp., in 2016, according to a 2018 health annual statement filed with Maine in February..
The for-profit subsidiaries include a care management company, an insurance broker, and a company that writes health insurance in Connecticut, Maine and New Hampshire as well as in Massachusetts.
Harvard Pilgrim has been a member of the Federal Home Loan Bank of Boston since April 2015, and it has the ability to borrow up to $60 million from that organization.
The carrier has reinsurance with a $1.5 million deductible for most enrollees states, but with a $1 million deductible for enrollees in Maine, and a $1 million deductible for Medicare plan enrollees.