The Pennsylvania Insurance Department, according to state law, must approve the merger of the "Blues" unless the transaction would "substantially lessen competition," among other standards.
In their battle, instead of pointed lances, economists brandished PowerPoint slides on screens. They thrust and parried with resumes and reports, not swords and shields.
Mounted on the Blues horse was Barry C. Harris, chairman of a consulting company called Economists Inc. in Washington.
Harrisburg-based Capital Blue Cross, which generally opposes the merger, dispatched Monica G. Noether, a senior economist with CRA International, a Boston firm.
And the state insurance department retained its own economist to assist it in sorting out the ideas as it decides on whether to approve the merger.
It was an economists' free-for-all in Pittsburgh at the first hearing, with four testifying in one day.
Blues man Harris led off, defining competition as the opportunity for buyers to choose among similar products in their geographic region.
"For example, automobile-repair services are not a substitute for appliance-repair services. . . . Automobile-repair services in Altoona are not a substitute for automobile-repair services in Allentown," he testified.
Likewise with insurance, Harris concluded. Regional subscribers today cannot choose between Independence Blue Cross and Highmark, so having a combined company would not change their situation.
That's why, he argued, insurance is essentially a regional market. And many other witnesses agreed.
Not so, countered Capital's Noether.
Once the companies merged, they would become a statewide company in a statewide market. Their combined clout, she said, would discourage new insurers from writing business in Pennsylvania.
While the economists mostly talked about competition in relationship to other insurers, some witnesses looked at the issue from a broader health-care perspective.
