Premera seeks for-profit status

Premera Blue Cross, Washington state's oldest and largest nonprofit health insurer, is taking yet another step in its attempt to become a for-profit company.

Lawyers for Premera argued in the Washington Court of Appeals Nov. 7 to reverse a July 2004 ruling by Washington Insurance Commissioner Mike Kreidler, who blocked Premera's conversion plan.

Kreidler said the conversion would negatively impact both Premera consumers and the general public.

Premera spokesman Scott Forslund said Kreidler had exceeded his authority under the state holding company act and that the decision did not meet requirements under the law.

Kreidler's rejection maintains that Premera's conversion could lead to less spending on medical care and higher premiums, especially in remote areas of eastern Washington, where Premera has a significant market share. But Forslund said experts had testified in public meetings that premiums would not increase at a higher rate and that physician reimbursements most likely would not be affected.

Rather than file the appeal in Washington's Superior Court, Premera and state officials agreed last year to take up the fight in the Court of Appeals, where the case likely would have ended up after being heard in a lower court. The Washington Court of Appeals is expected to rule on the case within the a year.

Premera announced its intent to convert to for-profit status in May 2002, leading to a review process that included two rounds of statewide public hearings.

Critics of Premera's conversion plan also include the Washington State Medical Assn.

"Would the diversity of care take a back seat to the needs to generate profits for shareholders? If we look at some of the large national insurers, there are concerns about the practices," said Bob Perna, director of health care economics for the Washington State Medical Assn.

Premera says it would establish an endowment estimated to be worth between $500 million and $700 million, depending on when Premera would convert, that would be used for health initiatives in the state. But Premera's plan also contains lucrative financial rewards for the company's upper management.

Premera also needs approval from Alaska, which in July rejected the company's first application.