The proposed mega-merger between Pittsburgh's Highmark Inc. and Philadelphia's Independence Blue Cross could result in the shedding of 1,000 jobs from the combined company.

That's according to Highmark Chief Executive Officer Kenneth Melani, who for the first time yesterday put a figure on the number of work force reductions that could result from combining the state's two largest health insurers.

In comments following the merger's first public airing, held yesterday before Pennsylvania Sen. Arlen Specter and the rest of the U.S. Senate Judiciary Committee in Philadelphia, Mr. Melani confirmed that some of the cost-savings will come by way of job cuts, most of them through attrition. When announcing the deal last month, the companies had said no layoffs were planned but that any reduction would be handled through attrition and reassignments.

Jobs that are pared could return to the payroll if the combined company grows as anticipated, Mr. Melani added. The cuts would represent 3.5 percent of the companies' current combined work forces, totaling 18,000 in Pennsylvania and 28,000 nationwide. Together, the two companies -- barring mergers elsewhere -- would create the nation's third-largest health insurer and would capture more than half of Pennsylvania's open market.

"The new company will generate $1 billion in economic benefits that will be used to achieve savings for our customers and to expand access to health insurance for Pennsylvania's uninsured," Mr. Melani said.

In theory, the job cuts and the company's increased buying clout could give the combined Highmark-IBC the flexibility to minimize premium increases or get better prices on prescription drugs, in theory. But the witnesses invited to testify at the hearing, held at Philadelphia's National Constitution Center, worried the merger would reduce competition in the state.

"While economies of scale and efficiencies may be achieved by this merger and result in positive short-term benefits, there must be concern over its long-term affects," state Sen. Don White, an Indiana County Republican, said in testimony he submitted to the committee. "Creating the third largest insurer in the nation with a specifically defined geographic territory is not [in] the best interests of competition."

IBC's top official, Joseph Frick, said the combined company wouldn't reduce competition because the separate companies don't compete in the first place, with Highmark doing business primarily in Western Pennsylvania and Independence in the state's southeast.

But the Pennsylvania Medical Society, a trade and lobbying group representing the state's doctors, wasn't buying that simple, geographic explanation.

"Highmark and IBC currently do not compete in the same areas of the state, but that doesn't mean it couldn't do harm. It's possible that a merger of this size could deter new competition in those markets, causing insurance premiums to increase at a more rapid rate than we are already experiencing," according to C. Richard Schott, the medical society's vice chairman.

Mr. Melani, meanwhile, was questioned by Mr. Specter about his salary, which last year totaled $3.22 million, which was up from $2.55 million in 2005 and included a $2 million bonus, according to Highmark's annual filing with the state Department of Insurance.

Gov. Ed Rendell and Sen. Bob Casey, both Democrats, also attended the hearing.