July 12, 1999
Page 30
News
Group claims Mont. Blues is too powerful
Montana Blue Cross and Blue Shield has rejected the demands of a new consumer advocacy group that it surrender its tax exemption and return as much as $35 million in reserves to policyholders through premium reductions.
The 270,000-enrollee Blues characterized the proposal by the Allied Citizens for Healthcare Equity as an organized attack on managed care.
"Their demands are absurd," said Chuck Butler, the Blues' vice president of public and government affairs.
Allied Citizens' Executive Director Susan Good claims the insurer has become so large and powerful that it dictates how medicine is practiced.
"Everyone is worried about possible retributions from this company should they complain about service," said Good, a Helena, Mont.-based healthcare lobbyist who served a term in the state Legislature and as chairwoman of the Montana Republican party in the early 1990s. Good formed the consumer group in June.
Good pointed to statistics from the Montana Department of Insurance showing the Blues controls 44.4% of the healthcare market.
Yet despite its size, the Blues is one of Montana's few not-for-profit insurers, so it is exempt from the state's 2.75% tax on insurance receipts. The state misses about $6.5 million per year in revenues because of the exemption-something Allied Citizens wants rescinded.
The $35 million the group wants the Blues to refund is based on a National Association of Insurance Commissioners recommendation that reserves represent 10% of annual premium receipts, according to Good. For the Blues, that would be about $24 million. Good contended the insurer has as much as $57 million in reserve.
The Blues' reserve is actually closer to $70 million, according to Butler. However, the health plan does not intend to surrender a penny.
"If all we had in the bank was $24 million, that wouldn't even get us through one month," Butler said. If the state subjected the Blues to the insurance receipts tax, the insurer's bill would be tacked onto policyholders' premiums, he said.
Butler said Allied Citizens was formed because a provision that would have made health plans legally liable for their enrollees' medical treatments was deleted from recent managed-care reform legislation.
Good confirmed that she had lobbied for the legislation but declined to reveal the source of funding for her group, which has a projected annual budget of $120,000. Among its three-member board of directors is state Sen. B.F. Christiaens, a Great Falls Democrat.
-- Ron Shinkman
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