The public’s insurer

No one who has followed the nationwide string of mergers in the health care industry could be surprised this week by the announced merger for Blue Cross & Blue Shield of Maine. Its proposed purchase by Anthem Insurance Co., an Indiana-based company more than 10 times the size of the Maine company, is about increasing profits through efficiencies. The questions for Maine are whether it is getting a good deal for the nonprofit health care provider and how Blue Cross’ charitable duties will be carried out if it becomes a for-profit firm.

Anthem’s plan to dominate the New England health care market depends on its ability to buy struggling Blue Cross & Blue Shield plans at attractive prices. Maine’s plan, however, is part of the public trust — it has the tax breaks to prove it — and it is the responsibility of the state to ensure that the price paid adequately reflects the plan’s value. Anthem has offered $120 million, approximately $100 million of which would go into a charitable trust, as required by law. That figure sounds large, but comes nowhere near meeting Maine’s health care charity needs. As a comparison, consider that the state tobacco settlement will provide Maine with at least $50 million per year forever to meet health needs.

Another comparison the state might make in determining whether to approve this plan is the deal Anthem made with the New Hampshire Blues, which, like Maine, owns about one-third of the state’s health insurance market. Again, the same $120 million purchase price, but New Hampshire has approximately 350,000 customers, 10 percent less than Maine. And where the Maine plan more or less broke even last year, New Hampshire’s lost $20 million.

A significant factor in determining the purchase price may be the projections of where the companies will be in three or four years, but on the surface, the offer seems either too high in New Hampshire or too low in Maine. Other comparisons could be made throughout the region: Anthem has made overtures to every New England Blue, having been turned down by both Massachusetts and Vermont, according to the Wall Street Journal. It already owns the Connecticut plan and has been talking to the one in Rhode Island. Those negotiations might give state regulators some idea of the sort of deal Maine was offered.

The charitable duties of Blue Cross have been important to this state since the insurer’s founding in 1939. Often referred to as the insurer of last resort, Blue Cross traditionally has accepted subscribers at a reasonable rate when for-profit companies would not. The change in status should be of particular concern to rural network providers with aging populations, who may be more expensive to insure and have fewer alternatives for coverage. Recipients of the many charitable projects of Blue Cross — from raising childhood immunization rates to working with The AIDS Project in Maine — gave it real public value statewide. It should not be underestimated now.

Certainly, competition in the health insurance business may force Blue Cross into a merger with someone and Anthem may be the most attractive suitor around. But to really understand what the purchase means, its details and their potential alternatives should be discussed freely and openly in public. Maine wouldn’t be the first state to express concern.

Consider that even with some of the best of for-profit insurers in the nation, Massachusetts’ most prominent doctors last year circulated a letter excoriating profit-driven health care systems where the “canons of commerce are displacing dictates of healing, trampling our professions’ most sacred values.” Less dramatically here, the public might want to know what changes they can expect if Blue Cross were to become a domestic stock insurer, it being prohibited by state law from becoming a mutual company, like Anthem.

Maine also should understand the long-term goals of the parent company. Anthem is among the nation’s top 10 health care companies, which own 40 percent of the market and undoubtedly will own more during the next few years. Oligarchy is not far off. If competition is good for health care, anyone with a stake in the nation’s health care system might ask why they are watching it disappear.

The state is expected to receive the purchase and charitable trust proposals from Anthem and Blue Cross in early August and has 60 days to consider them. That would be an excellent time for the companies to further explain the changes ahead. Full public involvement in these discussions will be critical.