Bowing to opposition at the state level, Pittsburgh-based Highmark Inc. and Philadelphia-based Independence Blue Cross (IBC) have withdrawn their applications to the Pennsylvania Insurance Department (PID) to merge the health insurers.

The companies threw in the towel rather than accede to terms from the PID, including relinquishing either the Blue Cross or the Blue Shield brands.

"During the last 21 months, our proposed combination has been closely examined in an unprecedented, wide-ranging, and open review with extensive public comments, outside expert analysis, and 10 public hearings,” Kenneth Melani, M.D., president and CEO of Highmark, and Joseph Frick, IBC's president and CEO said in a statement. “However, in recent days, it became clear to us that despite the well-documented advantages of the consolidation for our customers and our communities, the Insurance Department would not approve the transaction because of its belief that there would be an adverse impact on competition.”

The carriers said that they “fundamentally disagree” with the PID’s contention the merged company would lessen competition in the market, noting the U.S. Department of Justice cleared the deal on two separate occasions.

Ultimately, the PID’s insistence on stripping the combined company of one of its brands proved to be the deal breaker.

“Throughout the review process, we have stated repeatedly that we would not give up one of our brands,” the statement reads. "While we believe that the combination as originally proposed would have been of great benefit to all of our stakeholders, we concluded that giving up one of our brands would preclude the new company from delivering to our customers, communities, and the Commonwealth the full results we had projected. This is genuinely disappointing.”

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