Document 629 : Docket No. 99-14 : Hearing Decision : Bureau of Insurance

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on March 28, 2000, a copy of Applicant’s Exhibit C-37, Pre-filed Testimony of Keith Vangeison, Confidential Version was served by United States mail, first class postage prepaid, or, where indicated, by hand delivery, or e-mail, on each of the persons listed below.

James B. Zimpritch

Pierce Atwood

One Monument Square

Portland, Maine 04101

e-mail: jzimpritch@pierceatwood.com

Judith Chamberlain, Esq.

State of Maine

Department of the Attorney General

6 State House Station

Augusta, Maine 04333-0006

e-mail: judy.chamberlain@state.me.us

(Bureau of Insurance)

William H. Laubenstein, Esq.

State of Maine

Department of the Attorney General

6 State House Station

Augusta, Maine 04333-0006

e-mail: bill.laubenstein@state.me.us

(Office of the Attorney General)

Gregory A. Brodek, Esq.

Duane, Morris & Heckscher, LLP

15 Columbia Street, 4^th Floor

Bangor, Maine 04401-6355

e-mail: gabrodek@duanemorris.com

(Maine Health Alliance)

Joseph P. Ditre, Esq.

Consumer Health Law Program

One Weston Court, Level One

P.O. Box 2490

Augusta, Maine 04338-2490

e-mail: jditre@mainecahc.org

(Consumers for Affordable Health Care Foundation/Coalition)

Michele M. Garvin, Esq.

Ropes & Gray

One International Place

Boston, Massachusetts 02110-2624

e-mail: Mgarvin@Ropesgray.com

(Central Maine Healthcare Corporation; Central Maine Partners Health Plan)

Robert I. Goldman

Maine Council of Senior Citizens

27 Bowery Beach Road

Cape Elizabeth, Maine 04107

e-mail: Rgoldma1@maine.rr.com

(Maine Council of Senior Citizens)

Bonnie Post

Executive Director of the Maine Ambulatory Care Coalition

P.O. Box 390

Manchester, Maine 04351

e-mail: bdpmacc@mint.net

(Sacopee Valley Health center, Regional Medical center at Lubec, Eastport Health Care, Inc., and the Maine Ambulatory Care Coalition)

John Dieffenbacher-Krall

Executive Director

Maine People’s Alliance

192 State Street

Portland, Maine 04101

e-mail: MPA@gwi.net

(Maine People’s Alliance)

Gordon H. Smith, Esq.

Maine Medical Association

30 Association Drive

P.O. Box 190

Manchester, Maine 04351

e-mail: gsmith@ctel.net

(Maine Medical Association)

Donald E. Quigley, Esq.

General Counsel

465 Congress Street, Suite 600

Portland, Maine 04101-3537

e-mail: quigld@mail.mmc.org

(Maine Medical center)

Sandra L. Parker, Esq.

Attorney for MHA, Inc.

150 Capitol Street

Augusta, Maine 04330

e-mail: sparker@themha.org

(MHA, Inc.)

Kellie P. Miller, M.S.

Executive Director

Maine Osteopathic Association

693 Western Avenue

Manchester, Maine 04351

e-mail: meosteo@mint.net

(Maine Osteopathic Association)

John P. Doyle, Esq.

Preti, Flaherty, Beliveau & Pachios, LLC

One City center

PO Box 9546

Portland, Maine 04112-9546

(Maine Hospital Association)

Michel LaFond

Sulloway and Hollis, P.L.L.C.

9 Capitol Street

Box 1256

Concord, New Hampshire 03302-1256

Applicants’ Exhibit 41

STATE OF MAINE
DEPARTMENT OF PROFESSIONAL AND FINANCIAL REGULATION
BUREAU OF INSURANCE

IN RE:	)
APPLICATION OF ASSOCIATED	)
HOSPITAL SERVICE OF MAINE,	)
d/b/a BLUE CROSS AND BLUE	)
SHIELD OF MAINE, TO CONVERT	)
TO A STOCK INSURER AND	)
VOLUNTARILY LIQUIDATE	)
AND Dissolve	)
	)	PREFILED TESTIMONY OF
and	)	RONALD HARRIS,
	)	MILLIMAN & ROBERTSON
IN RE:	)
APPLICATION OF ANTHEM	)
HEALTH PLAN OF MAINE, INC. TO	)
ACQUIRE THE ASSETS OF	)
ASSOCIATED HOSPITAL SERVICE	)
OF MAINE d/b/a BLUE CROSS AND	)
BLUE SHIELD OF MAINE AND	)
RELATED TRANSACTIONS	)

Docket No. INS-99-14 (CONSOLIDATED)

March 28, 2000

Q. Please state your name and occupation.

A. My name is Ronald G. Harris. I am Principal and Consulting Actuary with Milliman & Robertson, Inc. I am a Fellow of the Society of Actuaries (F.S.A.) and a Member of the American Academy of Actuaries (M.A.A.A.). I am qualified under the Academy's qualification standards to render the opinions I have delivered with respect to this testimony.

I have over 25 years of experience in the health insurance actuarial field. I have been a consulting actuary specializing in health with Milliman & Robertson since 1978. As a consulting actuary, I provide advice to a broad range of risk-taking entities in the health care field. It includes many Blue Cross and Blue Shield plans, HMOs and PPOs, provider groups and others. During my 21 years as a consulting actuary, I have personally worked with over two-thirds of the Blue Cross and Blue Shield plans around the country and with a great number of HMOs. My consulting covers all aspects of actuarial work for health insurers, with an emphasis on rating and financing arrangements and on delivery systems. I have assisted clients through a wide range of assignments over the years, including in particular strategic planning, provider network design and incentives, benefit and coverage design, and health program rating and financing.

I have been assisted in the preparation of this testimony by William Finch, F.S.A., M.A.A.A., who is also a Principal and Consulting Actuary with Milliman & Robertson, Inc.

Q: What is the business of Milliman & Robertson?

A. Milliman & Robertson is an internationally recognized leader in the actuarial consulting industry, and is recognized as an expert in actuarial advisory work. Our firm is well established in all of the major specialty areas of actuarial advisory work, including health. We have the largest actuarial consulting practice to health insurers (commercial insurance companies, Blue Cross and Blue Shield plans, HMOs and providers) in the country. This area of specialization dates back over 30 years, when Milliman & Robertson pioneered the application of actuarial principles to health insurance on a consulting basis. Today the firm is actively involved in all aspects of health actuarial consulting, across the entire spectrum of health insurance risk-takers.

Q. What service has Houlihan Lokey performed in relation to the Anthem/ BlueCross BlueShield of Maine transaction under consideration by the Superintendent.

A. Milliman & Robertson was retained by BlueCross BlueShield of Maine to provide a Comparative Premium Rate Analysis pursuant to Chapter 344 of the Maine Public Laws of 1997, codified at 24 M.R.S.A. § 2301-9(D), par. H.

Q.What did you to perform the Comparative Premium Rate Analysis ?

A. In conducting our analysis, we reviewed various documents provided by BlueCross BlueShield of Maine. These included the Conversion Plan and Asset Purchase Agreement filed by the Company, and financial statements it prepared, both historical and pro forma. As part of our review process, we communicated directly with the managements of both BlueCross BlueShield of Maine and Anthem Insurance Companies.

Q. Did Milliman & Robertson’s analysis concern only the conversion transaction itself, or did it consider the conversion and the sale to Anthem as part of a unitary transaction for purposes of analysis ?

A. In reaching our conclusions, we considered not just the formal conversion of BlueCross BlueShield of Maine to a for-profit stock insurer, but also the sale of substantially all of the assets of BCBSME to Anthem Insurance Companies’ subsidiary that will operate in Maine. Our conclusions, therefore, reflect a comparative premium analysis of the conversion of BlueCross BlueShield of Maine and sale of its assets to Anthem.

Q.What are the results of Milliman & Robertson’s analysis ?

A. Our assumptions, analysis, and conclusions are set forth in the Comparative Premium Rate Analysis, which appears as Applicants’ Exhibits 4A (non-confidential) and C-4B (confidential). In brief, from our analysis we concluded that the conversion of BCBSME and sale of assets to Anthem will have no material adverse impact on premium rate levels or the cost to subscribers, or on the Company’s underwriting profit, investment income, loss and claim reserves; further we concluded that the Conversion is likely to benefit the Company and all of its subscribers in total by enabling a stronger long-term capital base.

Date: March 28, 2000