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Archive for Sunday, March 2, 2003

Justices to review Blue Cross sale

March 2, 2003

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— When Kathleen Sebelius used her power as insurance commissioner last year to block the sale of Kansas' largest health insurance company, she said she was protecting consumers.

Sebelius maintained that Anthem Insurance Cos. Inc.'s purchase of Blue Cross-Blue Shield of Kansas would have raised Kansans' premiums unacceptably. Blue Cross is a nonprofit operation owned by policyholders, while Indianapolis-based Anthem is a profit-making corporation.

Many Kansans apparently approved of Sebelius' February 2002 action. Nine months later, she won the governor's race after citing the Blue Cross matter repeatedly in her campaign advertising.

But the issue has not gone away. A Shawnee County judge ruled in June that Sebelius lacked the authority to block the sale and had based her decision on "mere speculation." The judge ordered Sebelius to reconsider; she appealed his ruling instead.

Wednesday, lawyers for Sebelius and the two companies -- which still want to complete the deal -- will argue their cases before the Kansas Supreme Court.

The Supreme Court could either uphold Sebelius' decision, allow the sale to proceed or return the matter to the state Insurance Commissioner's Office, now occupied by Sandy Praeger.

Steadfast opposition

Sebelius still opposes the deal, and doctors, hospitals and advocates for the poor continue to have misgivings.

"I haven't seen a single thing that's since changed my mind," Sebelius said in an interview Thursday. "The takeover of Blue Cross-Blue Shield is not good for policyholders, and it's not good for the insurance-buying public."

Officials of Anthem and Blue Cross continue to argue the deal will help secure the Kansas operation's longterm financial health by giving it access to more potential business and capital.

"This is a no-brainer for Kansas," said Blue Cross spokesman Graham Bailey. "There's so much smoke out there. Our detractors just don't seem to be able to argue their position on the facts."

Uneasiness

Praeger declined to discuss the deal directly, because she may have to review it. But she said any transaction that either puts a non-Kansas company in charge or turns a company owned by policyholders into one owned by stockholders would create uneasiness.

"I'm always concerned about who's providing services," she said. "In Kansas, we've had a company providing, as a nonprofit, good service. I would hate to see money leave the state."

Anthem planned to pay $190 million for the Kansas company, and Blue Cross would have distributed at least $142 million of Anthem's funds and $131 million of its existing reserves to policyholders.

Blue Cross has 45 percent of the Kansas health insurance market, with 172,000 group and individual policies covering 400,000 people; an additional 315,000 people work for employers who self-insure but have their plans administered by the Blues.

Anthem has acquired nonprofit health insurers in other states and is now the nation's fifth-largest publicly traded health benefits firm, with about 11 million policyholders. It contends it can reduce costs in Kansas through efficiencies.

Doctors in Indiana have accused Anthem of unfair billing practices, and the company has had long negotiations with hospitals over health coverage contracts. Last year, Indiana's insurance commissioner ordered an investigation of Anthem's claims practices, with findings expected in April.

"There are lots of problems in the states where they're doing business," Sebelius said.

In Kansas, some critics of the deal contend Anthem is paying too little for Blue Cross and are trying to revise a state law relating to the sale. Anthem and Blue Cross, meanwhile, said the terms are fair to Kansas policyholders.

"Anthem is a good company," Bailey said. "If they weren't a good company, they wouldn't grow their business."

While the public debate is about whether the deal is good for consumers, the arguments before the Supreme Court will focus on the insurance commissioner's authority.

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