Approve or Deny Merger: The Story of Two Stacks of Paper
I sure wish I could take a peek inside of Pennsylvania Insurance Commissioner Joel Ario’s office. Which stack of paper is taller? The one favoring the proposed merger between Pittsburgh-based Highmark, Inc. and Philadelphia-based Independence Blue Cross or the stack that says deny the merger?
If the stacks of paper were even as of early last week, then a memo by the Center for American Progress, entitled “A Perfect Storm” then this might tip the stacks in favor of denying the merger request.
I must editorialize now that “perfect storm” is becoming an overused term and takes something away from the 1991 event where 12 individuals lost their lives during a Halloween Nor’easter, including six onboard the Andrea Gail, a 72 foot commercial fishing vessel. Everything nowadays is a “perfect storm,” when in fact there was really only one perfect storm in recent memory.
The phrase “perfect storm” originated from a 1997 book “The Perfect Storm,” authored by Sebastian Junger, which refers to a simultaneous occurrence of weather events which, taken individually, would be far less powerful than the storm resulting from their combination. Such occurrences are rare, so even a slight change in any one event contributing to a perfect storm would lessen its overall impact.
Since the 1997 book and 2000 movie by the same name, the phrase has gained popularity and grown to mean any event where a combination of circumstances will aggravate a situation drastically. The term is also used to describe a hypothetical hurricane that occurs in a region’s most vulnerable area, resulting in the worst possible damage by a hurricane of its magnitude.
In the course of his research for his book, Junger spoke with Bob Case, who had been a deputy meteorologist in the Boston office of the National Weather Service at the time of the storm. Case described to Junger the confluence of three different weather-related phenomena combined to create what Case referred to as the "perfect" situation to generate such a storm. From that, Junger coined the phrase “perfect storm” and chose to use that as the title of his book.
The storm was costly with damage estimates at $208 million. The Andrea Gail began her final voyage, departing from Gloucester, Mass., on Sept. 20, 1991, bound for the Grand Banks, an underwater plateau, southeast of Newfoundland on the North American continental shelf. After experiencing poor fishing there, Captain Billy Tyne decided to try fishing near the Flemish Cap, the shallow waters in the northern Atlantic Ocean, east of St. John’s, Newfoundland and Labrador.
The vessel began her trip back on Oct. 26, 1991, just as the storm was intensifying. The last reported transmission from Capt. Tyne was around 6 p.m. on Oct. 28, 1991. Captain Tyne’s final recorded words were, “She's comin' on, boys, and she's comin' on strong!” The storm created waves that exceeded 100 feet in height, which ultimately sank the Andrea Gail and lost her crew somewhere along the continental shelf near Sable Island Chaunceys.
The Higmark-IBC proposed merger is in no way a perfect storm whether approved or disapproved by the insurance commissioner, though Center for American Progress’s memo author David Balto shows the center has definitely tried to stack the final piece of paper on Ario’s desk in favor of denying the proposed merger.
It is not known whether this is the only official testimony offered by the center or if other testimony was given during several public hearings last summer. The center’s memo reads like testimony, nonetheless:
"This merger will cost more than simply higher premiums and diminished service. Any health care reforms likely to be enacted by Congress in the next few years will rely heavily on health insurance companies for financing and payment. Competition between health insurance companies in each state will be critical to controlling costs.
"For example, states heavily depend on private health insurers for numerous government-sponsored programs, especially for the elderly. When the federal government typically envisions these programs, it assumes that there exists a competitive insurance market with several competitors (at least 4-5) and relatively easy entry. But if the Highmark/IBC merger is approved, the Philadelphia area, and probably soon thereafter the entire commonwealth, will become ‘fortress Highmark.’ And when it comes time to initiate new health care programs or enact health care reform, it will be Highmark and its 70 percent market share rather than the commonwealth that will call the shots,” the report continued.
So, as Ario ponders the two stacks sitting before him on his desk and Pennsylvanians await a decision that could come as early as next week, we can expect to see Ario’s well-thought-out decision -- whether his decision favors the “approve the merger stack” or the “deny the merger stack” -- though it won’t be a perfect storm anyway you look at it.