The insurance subsidiary of the University of Pittsburgh Medical Center, Pittsburgh's largest hospital system, told a state Senate panel yesterday that the proposed cross-state insurance merger between Highmark Inc. and Philadelphia's Independence Blue Cross is "anti-competitive" and should be junked by the Insurance Department on those grounds.

"The proposed consolidation will harm consumers and providers, and will not improve affordability, access or quality," said Daniel Vukmer, vice president and general counsel for UPMC Health Plan.

Mr. Vukmer spoke at a hearing before the state Senate Banking and Insurance Committee in Harrisburg. Previous hearings have collected testimony from Highmark, IBC and people in favor of the merger, which would create one of the largest health insurers in the country. Yesterday's hearing featured testimony from those who opposed the merger, including the chief financial officer for Geisinger Health Plan, and the president and CEO of the Pennsylvania Insurance Federation.

Mr. Vukmer tied the merger proposal to current events:

"It is somewhat ironic that we are considering allowing the creation of such an enormous entity that will essentially control health care across Pennsylvania into the future while we are in the midst of a financial meltdown resulting from putting too much faith in too few, large, influential companies."

Highmark responded: "We believe that the combination of Highmark and Independence Blue Cross will benefit the people of Pennsylvania. It is a pathway to change that will help make health care in our state more accessible and affordable."

Highmark and IBC say the merger will yield $1 billion in efficiencies for policyholders over the next six years, but a report released last week suggested benefits to customers might be greater if the companies vied against each other.

Highmark and UPMC have had a good working relationship since 2002, when the two companies signed a landmark 10-year deal. UPMC won a contract with its best customer, and hundreds of millions in loans and grants from Highmark so UPMC could build a new Children's Hospital in Lawrenceville. Highmark, meanwhile, was guaranteed access to the wide UPMC network for a decade.

But before that deal, and at times since, the titans have clashed, and the proposed Highmark-IBC merger is the latest business dispute between the two. While UPMC's health network does business with Highmark, UPMC's health plan, formed 12 years ago as a way of gaining leverage over Highmark and insulating itself from future bargaining standoffs, is a rival. Highmark still has about half of the region's health insurance market share, while UPMC controls about 6.5 percent.