Premera chief tries to allay fears

Wednesday, May 19, 2004

Premera chief tries to allay fears
Switch to for-profit status wouldn't hurt service, Barlow says

By CANDACE HECKMAN
SEATTLE POST-INTELLIGENCER REPORTER

The head of Premera Blue Cross said yesterday that state officials are wrong in thinking his company would act differently as a public stock-selling corporation than it does now as a non-profit health insurance organization.

A state deputy insurance commissioner had earlier expressed his concern that Premera's strategy as a for-profit company wouldn't meet the needs of families and employers who buy health insurance in Washington.

Premera, Washington's largest health insurer, is seeking permission from Insurance Commissioner Mike Kreidler to change its status as a non-profit social welfare company to a public corporation traded on Wall Street.

For more than two weeks, arguments for and against Premera's request have been presented at a formal hearing in Tumwater. The conversion requires the state insurance commissioner's approval. Kreidler has until July 19 to rule.

Outside the hearing room yesterday, 41 people protested the conversion plan.

They held signs and chanted "Premera for people, not for profit," as the testimony continued.

In the two years since Premera announced its intention to convert, opponents, groups representing consumers, doctors and hospitals have expressed fears that the company unfairly would raise rates and restrict reimbursements to providers in some areas of the state if it were mandated by stockholders to raise profits.

Premera's critics, especially health care providers, argue that the insurer has strayed from its original charitable mission, established by hospitals in 1945.

Premera officials disagree.

"That doesn't square with the reality of the marketplace," H.R. Brereton "Gubby" Barlow, Premera's chief executive, said in testimony yesterday.

Barlow said all companies must provide good products and services to their customers to be successful. Because Premera faces stiff competition from other insurers, treating subscribers unfairly might force those people to jump ship.

Barlow also defended against claims by state representatives, doctors, hospitals and consumers who say Premera already has begun placing profits above the public good with recent business moves.

This year, the company has dropped some insurance programs, discontinued a contract to provide administrative service for Medicare and engaged in public contract fights, with some hospitals and state employees.

P-I reporter Candace Heckman can be reached at 206-448-8348 or candaceheckman@seattlepi.com

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