Highmark Inc., the state’s largest health insurer, is shifting its small-group business to a for-profit entity, which will allow it to consider medical underwriting.

The Pittsburgh, Pa.-based company intends to provide coverage to “some” of its small-group customers coverage, including its PPO products, through its for-profit subsidiary, Highmark Health Insurance Co., starting with July 1 renewals, according to Michael Weinstein, a company spokesman. The preferred provider organization and other products have been sold through Highmark Inc.

The move to medical underwriting would align Highmark with the three other Blues plans in the state and for-profit providers in the state, including UnitedHealthcare and UPMC Health Plan.

Highmark writes health coverage in the Western and Central portions of the state.

Longtime lobby for change

For six years, Highmark has lobbied for health care reforms, saying General Assembly action “would help stabilize the cost of health insurance for small employers over the long term, and would result in fair competition among insurers in the small group insurance market by establishing uniform rate regulation for all insurers,” Weinstein said in a statement.

The shift should not hurt the availability of products for Highmark customers, Weinstein said. “Small employers will continue to have a wide choice of products, since nearly all current products will be offered through the subsidiary,” he said.

Company officials anticipate the change will “produce minimal inconvenience” for its customers, he added.

News of the shift comes practically one year after Highmark and Philadelphia, Pa.-based Independence Blue Cross abandoned plans to merge, which would have created one of the largest health insurance companies in the nation. The two companies balked when Pennsylvania Insurance Commissioner Joel Ario told them that a condition of any merger approval would include them relinquishing either the Blue Cross or Blue Shield affiliation to assure competition in the state.

This story originally appeared in the February 2010 print edition of Insurance & Financial Advisor.