State regulators say Pennsylvania has one of the least competitive health insurance markets in the nation and they want to find out why.

The state Insurance Department has launched a formal examination of the four nonprofit Blue Cross insurers in Pennsylvania - Blue Cross of Northeastern Pennsylvania, Capital Blue Cross, Highmark Inc. and Independence Blue Cross - to determine if they engage in anti-competitive or unfair trade practices that violate state law.

The examination will focus on whether Pennsylvania consumers could reap the benefits of lower costs and greater choices from having a market that is more competitive, department officials said.
Pennsylvania's market is less competitive than in nine other populous states because of a key indicator, state Insurance Commissioner Joel Ario said in an interview Monday.

That indicator is the market share of the Blues compared to major national commercial carriers.
The combined Blue market share is almost 60 percent in Pennsylvania, compared to Blue market shares ranging from 18 percent to 48 percent in other states. Texas has a Blue market share of 18 percent, New York 33 percent and California 24 percent, according to a department document.
That means national commercial carriers such as Aetna, UnitedHealth and Health America have a smaller market foothold in Pennsylvania than in those other nine states, Ario said.

The examination will explore whether the Blues' territorial licensing agreements in Pennsylvania, under which each Blue does business only in its own region, are anti-competitive in nature.
If the Blues compete with each other instead of dividing up territory, then the national insurers and state-based insurers such as Geisinger Health Plan will have more of an opportunity to compete for customers, too, added Ario.

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