Harvard Pilgrim-Tufts Deal Would Produce Major Rival for Massachusetts Blues

By Jane Anderson

Blue Cross Blue Shield of Massachusetts (BCBSMA) would still retain its edge in the competitive Bay State market but face significant new competition if the merger between Harvard Pilgrim Health Care, Inc. and Tufts Health Plan goes through as planned, market analysts say.

Tufts and Harvard Pilgrim, which are in second and third place in the state's market, unveiled plans to merge on Aug. 14. One major motivating factor is a desire to take on BCBSMA more directly, says Dan Mendelson, the founder of consulting firm Avalere Health.

"BCBSMA maintains an advantage by virtue of its market share, brand and history, particularly in the Boston area," Mendelson tells AIS Health. "But you can never discount the ability of an agile upstart to gain market share — particularly in the fluid and profitable Massachusetts markets."

Joe Paduda, principal of Health Strategy Associates, LLC, says Harvard Pilgrim's failed 2018 effort to merge with Partners HealthCare likely influenced its plans.

"Harvard Pilgrim's stillborn effort to negotiate with Partners HealthCare last year may have convinced HP management that it wasn't big enough to get the discount rates necessary to compete with the Blues," Paduda tells AIS Health. "A combined HP-Tufts will have about 2.5 million members, which will put it about level with BCBSMA."

Still, both analysts say the Massachusetts Blues plan is prepared for the increased competitive effects that such a deal would bring.

BCBSMA has the largest fully insured commercial risk population in Massachusetts, with close to 1 million covered lives, according to AIS's Directory of Health Plans, and would remain in first place in commercial risk even after the merger closed.

From Health Plan Weekly