JACKSON — Even though several Blue Cross insurers around the nation have opted to merge and go public to remain competitive, Blue Cross Blue Shield of Mississippi isn’t among them.
“While many insurance companies have decided to withdraw from the health insurance market in the state, we are proud of our Mississippi roots and will continue to operate in the best interests of our customers, the people of Mississippi,” said Donald Bonin, spokesman for Blue Cross Blue Shield of Mississippi.
But the trend to merge and go public has been prevalent in other parts of the U.S. as competition in the health insurance business intensifies. One in four Americans is insured by Blue plans. Blue Cross Blue Shield of Mississippi writes about one third of the health insurance business in Mississippi.
The Blue plans, among the oldest in the nation, originated during the Depression as a nonprofit business when Justin Ford Kimball of Baylor University in Dallas introduced a plan to guarantee schoolteachers 21 days of hospital care for $6 a year. The plan quickly garnered nationwide attention and by 1939, the Blue Cross symbol was officially adopted by the American Hospital Association (AHA) as an example to other healthcare plans.
In 1960, the AHA commission was replaced with the Blue Cross Blue Shield Association, the trade association for the independent, locally operated Blue plans, and all ties to the AHA were dissolved by 1972.
In 1994, the Blue Cross Blue Shield Association voted to allow licensees to sell stock to the public. Since then, the association’s number of parent companies has dropped from 63 in 1996 to 44 in 2001. Four Blue plans have already gone public.
As it prepares for its initial public offering, Indianapolis, Ind.-based Anthem Insurance Cos. Inc., the nation’s largest operator of Blue plans, recently snapped up seven “Blue” plans and is acquiring another. Empire Blue Cross Blue Shield, which covers 4.3 million people in the state of New York, is also planning an IPO.
Lauren Green-Caldwell, a spokeswoman for Anthem, told The Associated Press, “We are in an industry that is heavily regulated and where technology is expensive. The IPO will give us more flexibility as we fund our growth going forward. The trend in the industry is toward consolidation and the (IPO-generated) funds will help in acquisition.”
Bonin said, “Over the past several years, many Blue Cross Blue Shield plans have made important structural changes that are required to adapt to the changing economics of the health care financing system in America. Different markets call for different business strategies. In some markets, stand-alone non-profit or mutual Blue Cross Blue Shield plans will remain strong. In others, changes such as mergers or conversions to public offering status may be necessary. In these cases, some plans feel they can achieve better economies of scale by merging, or better generate funds to invest in technology and expand their business by selling stock.”
Blue Cross Blue Shield of Mississippi recognized changing market conditions several years ago, Bonin said.
“In 1996, with the approval of our members, board of directors and insurance regulators, Blue Cross Blue Shield of Mississippi converted to a for-profit mutual insurance company,” he said. “That conversion leveled the playing field and allowed us to compete fairly with other insurers in the state. Prior to that, Blue Cross Blue Shield of Mississippi was subject to special legislation that was enacted in 1947. Over the years, that legislation had become antiquated and in some cases ambiguous. By converting to a for profit mutual insurance company, we are now subject to the same laws, rules and regulations as other insurance companies operating in the state.”
However, Blue Cross Blue Shield of Mississippi has no plans at this time to merge with another plan or to become a stock company, said Bonin.
“Each Blue Cross Blue Shield plan decides what is in the best interests of its customers based on the business climate in which it operates,” he said. “We are financially strong and last year ranked 12th out of the 48 Blue Cross and Blue Shield plans in terms of financial stability.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at firstname.lastname@example.org or (601) 853-3967.