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Consumers Must Take Priority in BCBS Transaction

October 17, 2012

By Monica J. Lindeen, Montana Commissioner of Securities and Insurance

Recently, Blue Cross Blue Shield of Montana announced their intention to join forces with Health Care Service Corporation, a Chicago-based insurer that runs Blue Cross and Blue Shield plans in Texas, New Mexico, Oklahoma and Illinois. Since then, I have had people from all over the state ask me what this deal will mean for consumers.

Executives at BCBSMT and HCSC publicly cited the technological advantages and administrative cost savings the combined effort could achieve -- two worthy goals for any company operating in the health insurance market. Laudable as those objectives may be, however, determining how the proposed transaction will benefit Montana insurance consumers will be my office's number one priority when deciding whether to approve or disapprove it.

As the state's chief regulator of the insurance industry, my office will review this transaction carefully. It is my personal goal to make our process as clear and transparent as possible. To that end, any public comment regarding this proposal can be submitted to my office. We will consider all input as we review the details of the transaction.

By far and away, BCBSMT dominates Montana's health insurance arena. BCBSMT controls a larger share of the health insurance market in our state than any of its competitors. Many factors have led to BCBSMT's success over the years, including its tax-exempt status as a non-profit. In 2011 alone, BCBS saved more than $13.5 million in taxes that it didn't have to pay.

That's why Montana's 2005 Legislature passed popular, bipartisan legislation to govern how non-profit health insurance organizations like BCBSMT can convert to for-profit status. The law protects the public's interest by leaving behind a private foundation for the public's benefit when a non-profit health insurer seeks to become a for-profit insurer.

The Legislature's actions were a direct response to the nationwide trend of Blue Cross and Blue Shield organizations converting to for-profit companies. Blue Cross and Blue Shield companies that had grown and prospered for years with tax-exempt status suddenly became for-profit behemoths, leaving nothing to show for years of public support through preferred tax status.

In 2005, I was a representative from rural, eastern Montana, and I supported the legislation to ensure Montana's consumers wouldn't be left empty-handed if BCBSMT converted. I remain committed to protecting the public's interest in review of this proposed transaction.

Executives at HCSC rightly call the company "customer-owned" because it has no investors. Being "customer-owned" is not the same as being non-profit, however, and HCSC is currently licensed to do business in Montana like any other for-profit insurer.

I am interested to see what this proposal holds for Montana consumers, as we have not seen anything in writing yet. In the end, BCBSMT has an obligation to all Montanans due to the extraordinary benefit it has received through years of preferred tax status. Once the formal proposal is submitted to my office, I look forward to reviewing it carefully and sharing that process with the people of Montana.

Public comment can be submitted to:

Commissioner of Insurance
840 Helena Avenue
Helena, MT 59601
-or-
csi@mt.gov