BOSTON (CBS/AP) — Harvard Pilgrim Health Care and Tufts Health Plan, the state’s second and third largest health plans, are talking about merging.

The two companies are exploring joining forces to compete more strongly with Blue Cross Blue Shield.

The two health care plans have signed a non-binding memorandum of understanding which would combine their operation and see whether a merger makes sense. The agreement is described as a first step in a long review process, with a final decision expected within the next several months.

Harvard Pilgrim operates the state’s second-largest health plan behind Blue Cross and Blue Shield of Massachusetts with more than one million subscribers. Tufts Health Plan has more than 735,000 members.

Tufts president and CEO James Roosevelt says exploring a merger would be a “responsible approach in an environment of unsustainable increases in health care costs.”

Nancy Trumbull, associate dean of Harvard School of Public Health and a former deputy insurance commissioner, told WBZ NewsRadio 1030 that this merger would mean a significant change in the market. She said on one hand it wouldn’t be good for consumers because there would be fewer options, but on the other hand it would be good because the merged company would have better leverage with hospitals and carriers.

Nancy Trumbull talks with WBZ NewsRadio 1030 Producer Jon MacLean

Jay McQuade, Vice President of Blue Cross Blue Shield of Massachusetts, said his company welcomes the competition and that it would be a plus for the state and people who purchase health insurance.

“If this merger does move forward we look forward to competing against them in this new dynamic, and we wish them well,” he told WBZ NewsRadio 1030.

Jay McQuade talks with WBZ NewsRadio 1030 Producer Jon MacLean

There is no indication on what a merger like this would mean to subscribers.

Associated Press writer Bob Salsberg contributed to this report.

(TM and © Copyright 2011 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2011 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)

Comments (3)
  1. FireGuyFrank says:

    This will dilute competition and increase prices for the subscribers. A very bad idea. The state needs to block this.

  2. nita says:

    What will this merger do for Medicare supplemnt plans in New Hampshire?

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