They were married for 40 years. But now Capital BlueCross is rival to Pittsburgh's Highmark Inc., and yesterday, Capital's CEO got a chance to testify about the proposed merger between Highmark and its new beau, Philadelphia's Independence Blue Cross.

Capital Chief Executive Officer Anita Smith said the merger, which would create one of the largest health insurers in the country, would further stifle competition in Pennsylvania's health insurance market unless some conditions are attached.

Capital BlueCross, based in Harrisburg, would be surrounded by the new entity if the state were to approve the merger. And while Highmark and IBC have testified that the merger wouldn't reduce competition in the state because the two insurers' geographic footprints don't overlap, Ms. Smith said her counterparts, Highmark CEO Kenneth Melani and IBC chief Joe Frick, were omitting key details.

"Highmark and IBC do not compete because they agreed not to compete in 1996. And now that non-compete agreement is expired. If they wanted, they could compete right now," she said to the Senate's Banking and Insurance Committee, which convened in Harrisburg.

"We could have a vibrant competition between these companies in Southeastern Pennsylvania this very minute."

She also urged the Senate panel to weigh the purported benefits of the merger -- $1 billion in "savings" on prescription and administrative costs -- against the damage that could be done to a market that will account for $500 billion in revenues over the next decade.

"Is a one-time payment worth mortgaging the competitive future of the enormous and vital market?" she asked.

After the hearing, she told the Post-Gazette that Capital BlueCross isn't opposed to the merger outright, but wants the approval to be conditional upon Capital's ability to sell its products across the state. Right now, it is limited to its prescribed 21-county mid-state market area, where it controls 30 percent of the health insurance business. Capital would need permission to sell elsewhere from the umbrella Blue Cross Blue Shield Association, and that permission is more likely to be granted if Highmark and IBC promise to not object to a loosening of the reigns.

"I think we got our message across. This is really Pennsylvania's last opportunity to make sure that we keep a competitive market," she said. "Capital should be given an opportunity to compete statewide."

At one time, Highmark was considering a merger with Capital, not IBC. But those talks, which spanned three years, collapsed in 2001, the year before the official expiration of a four-decade joint-operating agreement between Highmark and Capital. After that, the two non-profits became rivals. Highmark does business in the mid-state market as Highmark Blue Shield. (The fourth of the Blues insurers in the state, Blue Cross of Northeastern Pennsylvania, has an operating agreement in place with Highmark and has not publicly opposed the merger.)

Also asked to testify was James Buckley, president of the Delaware Valley Health Care Coalition, a multi-employer health purchaser. In the testimony he submitted, he protested the lack of "transparency" among health insurers, saying true, healthy competition isn't possible until the Legislature compels insurers and hospitals to be more open and accurate about the costs of procedures.

The savings being touted in the IBC-Highmark wedding would be "irrelevant if a transparency model is established," setting standardized hospital reimbursement rates.

"Instead of allowing the major health insurers to use their oligopoly power to receive preferential pricing and profits, health care providers should be able to charge reasonable prices to all health care customers."

Highmark and IBC say the merger will give them the size and efficiencies necessary to compete on a regional, even national, landscape with private, for-profit insurers.