Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Let Upmc and Highmark Argue It out State Legislators Have No Business Intervening in a Private Contract Dispute

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Let Upmc and Highmark Argue It out State Legislators Have No Business Intervening in a Private Contract Dispute

Article excerpt

Imagine an instance where McDonald's was mandated to purchase fries from Burger King or General Motors was required to buy auto parts from Ford. Intuitively and economically, this does not make sense. Yet that is exactly what the Legislature is trying to do in Pennsylvania.

The two parties in question do not make fries or cars, though: The University of Pittsburgh Medical Center and Highmark are in the health care market.

Those two companies successfully and voluntarily did business with one another for years until Highmark acquired the West Penn Allegheny Health System in April 2013 after 18 months of vetting by the state Department of Insurance. At that time, the Post-Gazette reported that the move was a clear attempt by Highmark to "establish an integrated health care delivery system . to compete with, and be an alternative to, the regionally dominant UPMC." Highmark already was dominant in this geographic area in the health insurance market.

UPMC did not take too kindly to its business being threatened and is deciding not to renew a contract with Highmark when it expires at the end of the year. That private business decision apparently upset some in the Pennsylvania Legislature. Republican and Democratic legislators have joined forces to propose a bill that would mandate that UPMC accept Highmark's contract and, in essence, be forced to buy from its competitor.

Further, Highmark is pushing the Legislature to adopt a policy that would mandate hospitals contract with "any willing insurer." That language would put insurers in the driver's seat and allow them to gain from such arrangements - whether with UPMC or other hospital groups.

Government policy should not pick winners and losers, yet these bills clearly show a preference for Highmark. In a Pittsburgh Business Group on Health survey, 28 percent of employers noted that they would replace Highmark coverage with coverage from a national provider if UPMC and Highmark do not reach a deal. …

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