“Selling KPS to Group Health is like mixing oil and water,” said Frank Haberlach, an independent health insurance agent in Port Orchard and industry veteran. “Group Health says they are not making any changes in four years. If you pay $19 million for a new toy, wouldn't you want to tweak it? They can't avoid it.”

KPS offers PPO type of insurance, while Group Health is an HMO. Haberlach said he has already seen decreased interest in buying KPS insurance, and many KPS customers have been switching to other carriers. One scenario this may lead to is KPS losing a good part of its subscribers. Already some groups like the South Kitsap School District have reportedly pulled out.

“Sooner or later, people insured with KPS will get out because they hate HMOs,” he said. “Group Health will end up with an empty sack.”

Local doctors and officials had opposed the sale and filed a motion to intervene. Thurston County Superior Court Judge Richard D. Hicks rejected their request for a 90-day reprieve so they could collect more information about the transaction.

“They (Group Health) have a history of diverting patients to Seattle. It will impact physicians, hospitals and ultimately the infrastructure of the local health care,” said Dr. Jason Cheung, president of the Kitsap County Medical Society, which was one of the parties requesting to intervene in the sale.

Cheung did not think in the short term the sale will make a big impact, but if KPS is then changed from a PPO to an HMO model, it could lead to Group Health's monopoly in the market. Even in the short term, being able to offer MSA, PPO and HMO insurance plans can become a powerful marketing tool, and Group Health could end up with a bigger market share, driving away competition.

“It may be attractive to employers…to have all three plans under one roof,” Cheung said. “If they have a high penetration in the market, other companies could be sent out of the market.” In the long term, that would impact already sky-rocketing insurance prices, he said.

The Kitsap County Medical Society had tried to present similar arguments before the court; those arguments were topped with concerns expressed by local government leaders about the economic impacts of the sale on the area. The city of Bremerton was also part of the court filing. Mayor Gary Bozeman could not be reached for comment.

In his ruling, Hicks said he had no authority to overrule the decision made by Insurance Commissioner Mike Kreidler, also saying he did not find the insurance commissioner's actions capricious or unlawful.

KPS President Elizabeth Gilje could not be interviewed, as she was still under a gag order at press deadline. The gag order was imposed by Kreidler on KPS managers and board members when the sale was announced.