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Archive for Wednesday, February 13, 2002

Insurance move

February 13, 2002

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Time will tell whether Kansans will continue to be better served by an independent Blue Cross and Blue Shield of Kansas than by a larger insurer.

It is the job of the Kansas insurance commissioner to make decisions that are in the best interest of insurance consumers in the state.

Although observers will speculate on various political motivations for this week's decision not to allow a merger of Blue Cross and Blue Shield of Kansas, it is hoped Insurance Commissioner Kathleen Sebelius based her decision solely on what she thought was best for Kansas consumers.

The decision on whether to allow a merger with Anthem Blue Cross and Blue Shield was not an easy one, and its real effect probably will not be known for several years. But Sebelius chose not to upset a status quo that is providing good service for Kansans.

Politically, the decision cuts both ways for Sebelius, who plans to run for the Democratic nomination for governor. Some Kansans may have thought Anthem would provide better insurance coverage or are upset that Sebelius prevented them from getting a check as part of the sale to Anthem. On the other hand, if the sale had been approved, any increase in health insurance rates would have been blamed on Sebelius' decision. Both are short-term impacts of a decision that will have a long-term impact on Kansans.

Blue Cross of Kansas officials had made a strong case for the merger. Anthem is a good company that successfully has taken over "blue" programs in other states. However, in every other case, they were taking over programs that were in trouble. That isn't the case with Blue Cross of Kansas.

The only question is whether Blue Cross of Kansas will suffer by remaining independent. Officials from both Kansas and Anthem acknowledged that, with or without the merger, insurance rates are likely to go up next year. Blue Cross of Kansas officials argued that being part of a larger organization would keep those increases at a minimum. Medical professionals and consumer groups argued that the profit margin required of a company like Anthem would make the increases even larger.

Blue Cross of Kansas officials said the strength of their company argued for selling it now, when the state can take its pick of merger partners. Consumer advocates said the strength indicates the company is able to stand on its own and no merger is needed.

Too bad we don't have a crystal ball to look into the future and see what would happen with the merger and what would happen without it. That would be the only way to really know which decision would be the best.

In the end, Sebelius looked at insurance premiums and profit motives and decided Kansas Blue Cross policyholders would be better off going it alone. Researchers in her office made what they called a conservative estimate that state policyholders would pay an additional $248 million in premiums during the next five years to meet Anthem's profit goals. Such increases would quickly swallow any income policyholders would get from an Anthem buyout. On the other hand, this is only an estimate, and apparently no estimate was offered concerning possible rate increases from Blue Cross of Kansas.

Health care costs are rising so rapidly that government intervention may be forthcoming to control costs and reduce the number of Americans without health insurance. In such an unsettled health care climate, sticking with a known quantity may not be a bad idea.

Kathleen Sebelius traveled the state, listening to consumer advocates, medical professionals and ordinary citizens. She then made the best decision she could on the information that was available. It's also true that this probably was the safest political decision Sebelius could have made because it likely won't have an immediate impact on Kansans, and it will garner support from certain consumer and citizen groups. Five or 10 years from now, Kansans will have a better idea whether the decision to deny the Blue Cross merger was the right one for the state.

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