FINAL OUTCOME OF BLUE CROSS CASE WILL BE CLOSELY WATCHED

Blue Cross and Blue Shield of Missouri suffered a setback in a circuit judge's ruling week before last. Cole County Circuit Judge Thomas Brown III ruled that the insurer broke state law in 1994 when it transferred most of its business to a new, not-for-profit subsidiary it established. Blue Cross shifted about 80 percent of its business to the new company, which provides health plans for 1.8 million Missourians, as against about 130,000 for the old company. The ruling is certain to be appealed, but in the meantime questions abound about how all this has unfolded over the last three years.

Prior to making the move, Blue Cross-Blue Shield sought and obtained the approval of state regulators for the move they were contemplating. Approval came from state regulators at the Department of Insurance. The move was made, the assets shifted and stock in the new company, RightCHOICE Managed Care Inc., was publicly offered. Missourians, together with every policyholder and every stockholder, have the right to ask why regulators in the state's Department of Insurance initially gave the green light before turning around and hanging up the deal after the fact.

Lost amid the demagoguery coming out of the Department of Insurance and the attorney general's office is the distinction between not-for-profit corporations, such as Blue Cross, and true non-profit, charitable institutions such as the Red Cross or Salvation Army. We are talking about a fine distinction tax lawyers argue over, but Blue Cross had long been a not-for-profit but had never been a true charitable institution.

Missouri Blue Cross president and chief executive officer Roy Heimburger said the ruling is "just the beginning of a legal process to clarify how Missouri law truly applies within the context of a dramatically changing health care industry." At stake as well may just be the survival of a Missouri-based company in this rapidly changing industry. Other states will join Missourians in watching this one closely.