Critics sing the merger blues

Tuesday, Aug. 26, 1997 | 2:12 a.m.

Advocates for uninsured Nevadans say Blue Cross Blue Shield should pump millions into a health-care fund in exchange for the right to operate as a for-profit corporation.

"One of our major concerns is the more than 400,000 Nevadans who do not have health insurance," said Patricia Van Betten of the Nevada Nurses Association.

She said a company pledge to set aside a $1.5 million trust for uninsured children is not enough, considering anticipated profits.

Van Betten aired her concerns Monday at a hearing conducted via teleconferencing from Carson City and Las Vegas. She was joined by other activists and by Blue Cross Blue Shield customers worried that their health care costs might soar.

"As I have watched premiums go up and service go down when for-profit conversion takes place, I wonder what will happen to my insurance when it too becomes for-profit," said Ruth Mills, president of the Nevada Health Care Reform Project. "Will my health care be the primary concern or will it be making a profit?"

Company officials, who said they want to sell stock to raise capital to remain competitive, said premiums won't go up right away.

"The truth is, the rates you pay and the services you receive the day before conversion won't be any different the day after conversion," said Blair Christensen, vice president of Blue Cross Blue Shield of Nevada. "Will your rates be the same forever? No health insurance provider -- for-profit or not-for-profit -- can make that guarantee and stay in business for very long."

Christensen also defended the company's offer of a $1.5 million children's fund, which the law doesn't require.

"The plan's board of directors voluntarily chose to establish a foundation for the benefit of Nevada children," he said.

Blue Cross Blue Shield has operated in Nevada as a nonprofit corporation since the 1960s. But in January, it received permission from Nevada Insurance Commissioner Alice Molasky-Arman to merge with Blue Cross Blue Shield of Colorado.

The hearing Monday was sponsored by Blue Cross Blue Shield, and the testimony will be sent to Colorado Insurance Commissioner Jack Ehnes, who declined to hold hearings in Nevada but will decide whether to allow Blue Cross Blue Shield to operate as a for-profit company.

Consumer groups said Nevada should receive at least $20 million for health care programs if that happens.

Brian Lahren of the Truckee Meadows Human Services Association said the company's offer of $1.5 million "appears a little anemic." He and others asked for a "fair evaluation" of the assets of the Nevada company that could be used for putting money into nonprofit organizations.

Colorado law, which will govern whether the switch can take place, stipulates the fair market value of the company must be set aside for nonprofit organizations. But Nevada groups are asking to divide the Colorado and Nevada portions, rather than having all the money go to Colorado.

Rev. Ronald Rentner, representing the Lutheran Advocacy Ministry in Nevada and the Religious Alliance in Nevada, urged the Colorado insurance commissioner "to make sure the citizens of Nevada are fairly compensated," or risk a lawsuit.

In most cases of a company switching to a for-profit firm, Renter said the officers and directors are enriched while the customers are treated shabbily.

But Neil Westergaard, media relations director of Blue Cross Blue Shield, said the Colorado law does not permit the director and officers to benefit if the company is converted.

Molasky-Arman said she, Gov. Bob Miller and Attorney General Frankie Sue Del Papa asked Colorado to hold hearings in Nevada but were rebuffed. Blue Cross Blue Shield serves about 49,000 members in Nevada.

In July, Consumers Union wrote a letter to Molasky-Arman, sharply criticizing her, saying she was not protecting Nevada's interest in the merger-conversion.

Judith Bell, the West Coast director of Consumers Union, told Molasky-Arman, "Because you approved the merger without fully evaluating and taking evidence regarding the Colorado law and the requirements under the Colorado conversion statute, Nevada subscribers will receive no financial 'value' as a result of the merger, only Colorado citizens will."

Molasky-Arman said there's a "great deal of confusion," and that the Nevada law "was followed exactly." She said she has no authority over the second phase permitting the transfer to a for-profit company.

Assemblywoman Bar bara Buckley, D-Las Vegas, said Molasky-Arman never permitted any questions during the merger hearings in December about the value of the company and how it would compensate Nevada.

But Molasky-Arman said after the hearing that it was "unfortunate they don't understand" what went on during the Nevada hearings.

The Colorado insurance commissioner is not expected to rule until next year.

SUN POLITICAL editor Larry Henry contributed to this report.