Keeping Blue Cross

Despite Anthem Insurance Co.’s legal battles in other states, Maine residents should listen in the coming months with an open mind to the company’s plan to acquire Blue Cross Blue Shield of Maine. Anthem and Blue Cross, for their part, should met Maine’s open mind with an open account of the deal.

They will have an opportunity to do that, thanks to Rep. John Baldacci, who last week discussed the merger with the possible partners and promptly scheduled public hearings for them. The hearings are tentatively scheduled for Aug. 18 in Bangor and Aug. 19 in Lewiston. As Maine’s traditional insurer of last resort, Blue Cross has served the public since 1939; the nonprofit’s change in stature to a domestic stock company should be of interest to at least the 380,000 residents it covers.

Certainly, mergers in the health-care industry are not new or unexpected. Blue Cross had been struggling for several years and was losing money as new insurers entered Maine and were offering low rates. Though rates have gone up recently, economies of scale still suggest that larger firms are likely to outcompete smaller ones.

Anthem, until just a few years ago the Blue Cross for Indiana, has grown to approximately 5 million customers and might provide the Maine company with the technology and capital it needs to stay competitive. Anthem’s growth hasn’t always been smooth, however. It faces lawsuits in Connecticut and Kentucky and has had battles in other states over the establishment of charitable trusts that would continue services previously provided by Blue Cross plans.

Maine’s concern is not that a merger is taking place but the conditions under which it occurs. Is the $120 million purchase price sufficient? Does the $90 million or $100 million of that to be dedicated to a charitable fund accurately reflect the fair market value of the plan, as required by statute? Were there better offers on the table? How much of the plan’s revenues that once stayed in state would leave?

Blue Cross is the largest insurer in Maine. Continuing the charitable services it has provided is especially important for the many residents who could not afford health care otherwise. Rep. Baldacci made the point succinctly when he said, I want to make sure than we don’t have to recreate another Blue Cross five years from now.

A thorough public discussion of the proposed merger could prevent that from happening. The public hearings area good time for residents to ensure that the future of health-care coverage doesn’t leave them behind.