LANSING, Mich. (Legal Newsline) - Blue Care Network has abandoned its plan to acquire Physicians Health Plan of Mid-Michigan, a Lansing-based HMO, much to the delight of state Attorney General Mike Cox.

Blue Care Network, which is owned by Blue Cross Blue Shield of Michigan, said it could not gain federal clearance for the purchase in a short period of time. Cox opposed the deal, saying it would've given BCBSM a nearly 90 percent share in Lansing's health insurance market.

"This is great news for Michigan residents, who are increasingly forced to buy their own insurance at a time when the economy is forcing cutbacks to family budgets," Cox said. "Competition is the force that keeps prices down and quality up."

Kevin Klobucar, the president of BCN, said moving on was in the best interest of everyone.

"(A) prolonged period of uncertainty would be extremely difficult for client employers, health plan members and employees at both organizations," Klobucar said. "It was not a desire of either organization to continue to focus our time and resources to litigate this matter."

PHP Mid-Michigan CEO Scott Wilkerson said his company has operated with a "business-as-usual" mindset durig the process.

"In light of the current regulatory climate, it has become obvious that we should move on and continue focusing on the best ways to serve PHP's members and our region," Wilkerson said.

The U.S. Department of Justice said it worked closely with Cox.

"We welcome the decision by Blue Cross-Michigan and Physicians Health Plan of Mid-Michigan to abandon their deal, which will preserve competition among health insurance companies in Lansing," said Christine Varney, Assistant Attorney General in charge of the Department of Justice's Antitrust Division.

"The merger would have likely led to higher prices, lower levels of service and decreased quality of health care for consumers."

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.