As the proposed merger between two Pennsylvania Blue Cross Blue Shield-affiliated plans comes closer to resolution, the answer to one question could determine its approval or rejection: What is a market?

Whether nonprofits Independence Blue Cross and Highmark Inc. are allowed to combine could come down to which perspective regulators believe is more germane: the distinct local markets each Blues plan works in now, or the regional and national markets in which the combined plan wishes to compete.

The merger would create one of the largest health plans in the country, with 7 million lives covered and an estimated $22 billion in annual operating revenue. It would be the third-largest health plan in the country, measured by premiums collected.

By some estimates, the combined company would hold more than 70% of the commercial health insurance market in Pennsylvania by combining Highmark's market share in western Pennsylvania with Independence's share in the eastern part of the state.

The Pennsylvania Medical Society and the American Medical Association are among those arguing that a combined company would hold far too much market dominance in the state. But the health plans say they currently don't overlap in Pennsylvania, so the market share effectively does not change. The companies also argue that they need to get bigger to compete for national business against the nation's largest for-profit plans, as more health insurers try to sell themselves as being able to handle a corporation's health coverage everywhere it is located.

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