LETTERS: BC-BS IS NONPROFIT, NOT CHARITABLE ORGANIZATION

To the editor:

The Southeast Missouri published a letter July 3, "Reply to Blue Cross," which made a number of incorrect allegations that arise from a misunderstanding of the facts.

Blue Cross and Blue Shield of Missouri is a nonprofit health services corporation, but it is not a charitable organization. We do not accept donations from the public, nor do we have a charitable tax exemption. Instead, we serve as conscientious stewards of our members' premium dollars. Our moral and legal obligation is to make those dollars go as far as they can in providing quality health care for our members, not to divert those dollars to some unrelated and undefined purpose as demanded by the Missouri Department of Insurance. The director of the department and his special-interest allies would have the public believe otherwise in their attempt to force a $200 million to $500 million payment by Blue Cross and Blue Shield of Missouri to an undefined entity under their control.

That's why we are trying to communicate the fact that, unlike a charitable organization, Blue Cross and Blue Shield of Missouri and its subsidiaries pay federal income taxes and applicable state taxes. We do so as a mutual-benefit, nonprofit corporation established to exclusively serve our premium-paying members.

No insurance company in Missouri pays state income taxes. Instead, for-profit insurance companies pay a 2 percent tax on each premium dollar. Our for-profit subsidiary, RightCHOICE Managed Care Inc., pays premium taxes just like any other Missouri for-profit insurance company, and these taxes amount to millions of dollars a year.

However, premiums paid directly to Blue Cross and Blue Shield of Missouri, which provides health-care benefits programs on a nonprofit basis, are exempt from the premium tax. The exemption's benefits go directly to our members in the form of health coverage that is more affordable than it would otherwise be. Furthermore, all surplus earned by Blue Cross and Blue Shield of Missouri remains in reserves for the benefit of members.

In fact, our longstanding commitment to providing our members with affordable, attractive health-coverage alternatives led to the creation of RightCHOICE Managed Care in 1994. Through RightCHOICE, we were able to access capital from private investors through a stock offering making possible the development of innovative health-coverage alternatives and the growth that is necessary in today's competitive health-care environment.

Finally, there should be no mistake about the strong commitment of Blue Cross and Blue Shield of Missouri and RightCHOICE Managed Care to continue serving our members in Missouri, even as we expand beyond Missouri to serve members in others states.

From the day more than 60 years ago when we originated prepaid health coverage, the mission of Blue Cross and Blue Shield of Missouri has not changed: to protect our members with high-quality health care at affordable costs. Decades later, health care has changed, but not our mission.

ROY HEIMBURGER, President

Blue Cross and Blue Shield of Missouri

St. Louis