HARRISBURG — The merger of Pennsylvania's two largest health insurers would have given them too much power in the state's insurance market, already one of the least competitive in the country, the state's top insurance regulator said Thursday.

The proposed consolidation of Blue Shield affiliate Highmark and Independence Blue Cross would have left patients with fewer choices and weaker networks of hospitals and doctors, Insurance Commissioner Joel Ario said.

"In this case, bigger would have been bad for consumers," Ario said. "It would have given the new company ... too much leverage in the Pennsylvania market."

Pittsburgh-based Highmark and Philadelphia-based Independence gave up on their nearly 2-year-old plan to merge on Wednesday, citing the Insurance Department's resistance.

The nonprofit companies said they were unwilling to accept the agency's demand that they relinquish either the Blue Cross or the Blue Shield brand as a condition of the merger.

Ario said his agency sought to impose that condition to allow another competitor to enter Pennsylvania as a Blue plan and expand what he called "Blue on Blue" competition.

"We never got past that point because ... the plans didn't want to go there." Ario said.

Spokesmen for both Highmark and Independence said they had no further comment beyond a joint statement issued Wednesday that expressed disappointment at the collapse of the merger plan.

Independence operates mainly in the Philadelphia area, while Highmark's customers live mostly in the western part of the state. Together, they serve more than 7 million people.