Move afoot to privatize Blue Cross Blue Shield of Montana

By SCOTT McMILLION, Chronicle Staff Writer

There is a move afoot to privatize the state's largest health insurance carrier, according to Brian Schweitzer, a Democratic candidate for U.S. Senate in 2000 who is frequently mentioned at a possible gubernatorial candidate in 2004.

Blue Cross Blue Shield of Montana affects about 400,000 Montanans through its private health insurance policies, its administration of Medicare programs and the Children's Health Insurance Program.

It provides health insurance for hundreds of Gallatin Valley residents, including state workers and Montana State University employees.

Run as a nonprofit cooperative since the 1940s, if BCBS were to go private it could mean big changes across the state.

Similar actions in other states "have not benefited the communities in which those plans operate," newly elected Michigan Gov. Jennifer Granholm, a Democrat, said last year when she was attorney general in that state. "They have not lowered the premiums or achieved better service."

Schweitzer, a Democratic farmer from Whitefish, maintains most people don't know BCBS is a nonprofit company and that privatization could have a bigger impact than electricity deregulation.

"Most people pay $50 to $80 a month for electricity," he said Thursday. "What do they pay for health insurance?"

However, there are no current plans to change the company's status, according to Tanya Ask, BCBS vice president for governmental and corporate affairs.

"At this point, we are not planning on converting," she said Thursday.

The company has investigated the legal mechanisms for converting to for-profit status, she said, but only so that executives would know their options in case the industry's legal atmosphere changed.

"It would have to be a radical change," before any steps would be taken toward conversion, she said.

However, a "wave" of Blues in other states have been taking those steps, according to www.amednews.com, which bills itself as "the newspaper for American's physicians."

Schweitzer said Blues in 32 states have tried to convert, though not all those efforts succeeded. He made health care costs a key issue in his unsuccessful race against Republican Sen. Conrad Burns.

BCBS, as a cooperative, is administered by a board of directors and employs hundreds of people. Although it has reserves of approximately $70 million, it has never paid income taxes because it is a nonprofit, with no shareholders.

"Technically, it is not owned by anybody," Ask said.

The lack of income taxes means the company has used public subsidies while building valuable assets for decades, Schweitzer said. That means, if it goes private, the public should be compensated.

He argues that the state is owed at least $100 million if the company goes private.

When California BCBS went private in 1993, it paid $3.2 billion to a foundation set up to improve health care in that state.

Schweitzer said he neither approves nor disapproves of privatizing the company, but wants to make sure everything is done properly and in the open.

He said he fears a "secret" deal.

Ask said her company originally thought it would take an act of the Legislature for the company to go private, but now maintains that state Auditor John Morrisson has the authority to detail and approve a conversion, should the company ask for one.

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