LETTERS: REPLY TO BLUE CROSS

To the editor:

This letter is in response to various articles and advertisements which recently appeared in the Southeast Missourian as well as other publications throughout Missouri. Blue Cross brags about paying millions of dollars in federal taxes each year, yet millions of Missouri citizens, including small and large business owners, also pay federal, state and local taxes. Why shouldn't Blue Cross pay taxes as most all of us do? For Blue Cross to glorify itself for paying taxes is a cheap shot to the hardworking men and women of Missouri who pay taxes as a fact of life.

Blue Cross pays very little in premium taxes compared to the amount other insurance companies pay to Missouri. Most often, every time an individual pays a non-group, commercial life or health premium, a small portion of the payments goes to the state. For the most part, premiums paid to Blue Cross provide to benefit to the state through premium taxes, unlike those paid by most other insurance companies.

Blue Cross' statement that the director of the Department of Insurance wants to impose a $200 million to $500 million tax on members of Blue Cross is simply a flagrant misstatement and misrepresentation of the facts. The money referred to by Blue Cross is excess surplus created because of overcharged premiums. If Blue Cross does not wish to follow the director's guidelines, they it should refund this excess surplus to its members and policyholders.

If Blue Cross has 500,000 policyholders and there is $500 million of surplus, then the citizens of Missouri who are members of Blue Cross should demand that the company send them a refund of $1,000 each.

An alternative to refunding the surplus would be to do like the mutual companies who wish to convert to a stock company and issue their policyholders shares in the new company. In this manner, each member could share in the profits.

According to the best information available, 80 percent of the profitable business of Blue Cross is its block of Medicare supplement policies, which it wishes to transfer into the new company. It wishes to keep the less profitable policies under the current system.

Informed individuals know that the only way for company executives to make money in a not-for-profit or mutual company is to own a for-profit company and have their compensation based on performance of the for-profit entity. The executives of Blue Cross will then be able to give themselves a bonus based on the profit of the new company. This could very conceivably amount to millions, and Blue Cross is so arrogant that it recently raised the Medicare supplement premiums of Missouri senior citizens without any prior approval from the Missouri Department of Insurance. It settled this case and paid the state a $1 million fine. This amounted to approximately a meager $3 for each Medicare supplement policy in force in Missouri. Yet the premium raise was as much as $100 per member. Its statement that it was fined $38 million is simply not true, as the company was never fined anywhere near this amount. All insurance companies are required to obtain prior approval from the state for rate increases. Blue Cross should have requested a rate increase on its Medicare supplement policies through the state just the same as any other company would be required to do.

In a recent advertisement, Blue Cross' chief executive officer, Roy Heimburger, states that Blue Cross may just pack up its employees and assets and move to another state. Blue Cross of Missouri is an independent licensee of the Blue Cross Association. Where does Mr. Heimburger think he is going to move? The rationale that Mr. Heimburger is going to take Blue Cross of Missouri to another state is about as practical as Bill Clinton saying to Bob Dole, "Come on in and share the oval office with me." There is absolutely no way Mr. Heimburger can or would move to another state.

Mr. Heimburger's statements remind me of a young child who gets his bat and ball and goes home if he doesn't like the way the game goes. He wants everyone else to play by one set of rules, and he expects to play by another.

In conclusion, Jay Angoff, the director of the Department of Insurance, may not always be correct from an insurance agent's viewpoint, but in this case he's right on the money. Blue Cross should not be allowed to take these assets from policyholders and for a for-profit company. If Mr. Heimburger wants to form this type of company, he needs to do like anyone else and go out and raise the necessary capital from conventional sources.

MICHAEL L. TOMLIN

Jackson