Judge Allows Union Of Two Major New York City Health Insurers To Proceed

November 21, 2006 – 9:30 pm | posted in Health Insurance, Medical Malpractice

A federal judge on Tuesday refused to grant New York City a temporary restraining order to block the union of insurance companies Health Insurance Plan of New York and GHI, which allows the companies to join together to create the largest health insurer in the metropolitan area, the New York Times reports. Lawyers for the city argued in Manhattan Federal District Court that the combined company would create a monopoly covering more than 90% of the municipal workforce. HIP and GHI lawyers countered that the court should overlook their dominance over the municipal worker market because of their smaller presence in the health insurance market among all large employers. The companies said their union would not be a merger but instead an affiliation in which they would retain separate identities and operations under a single governing foundation, according to the Times. When the arrangement takes effect, the insurers will be able to share financial information and operations that they can not share as competitors. The city said the information sharing would inhibit competition even if the union was dissolved (Perez Pena, New York Times, 11/15). Michael Cardozo, the city’s corporation counsel, in a statement said that “the merged entity could raise prices substantially because the next competitor is still far more expensive.” GHI Senior Vice President Eileen Margolin said the company’s rate structure would not allow premiums to be raised for city workers enrolled in its HMO without also raising premiums for other customers, which would ultimately drive away businesses (Perez Pena, New York Times, 11/14). Judge Kenneth Karas said he found the city’s claim “simply too speculative” and refused to grant the city’s request for a temporary restraining order against the union. The city might be able to present more evidence in the case in early January, according to the Times (New York Times, 11/15).

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