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Maine.gov > PFR Home > Insurance Regulation > Hearing Decision Index > Document 7 : INS 99-14 : Hearing Decision
"The Community Health Trust of Maine"
Bruce D. Cummings
Another venerable Maine institution, Blue Cross and Blue Shield (BCBSM), stands at the brink of becoming the latest casualty of change in ownership, ushering in with it: forfeiture of non-profit status, acquisition by a fast-growing Indiana firm, and further erosion of control by Mainers in their healthcare decisions.
It doesnt have to be this way.
Blue Cross officials have contended that BCBSM needs additional capital and more flexibility to compete in the marketplace. Theyre right. But rather than selling out to Anthem, a better choice is to recapitalize and remake BCBSM as a state-chartered corporation. By being converted to a quasi-public mutual corporation, BCBSM would receive an infusion of additional capital coupled with more flexible underwriting principles, both of which are presumptively necessary and concomitant changes to making its successor we could call it, the "Community Health Trust of Maine" -- economically viable and attractive to patients, purchasers, and providers alike. One need not look far afield for inspiration. The Maine Employers Mutual Insurance Corporation (MEMIC) stands as a relevant and successful precedent. Where MEMIC helped to improve Maines business climate and insurance affordability in the workers compensation sphere, the Community Health Trust of Maine (CHTM) would perform a similar role and public benefit with regard to health insurance.
The future mission and direction of the Community Health Trust of Maine would be shaped by the following charter principles contained in legislation that would be necessary to effect the Trusts creation:
Because of its unique status, CHTM would bear both special responsibilities and dispensations. Let me illustrate how the preceding charter principles would find expression in the Trust, thereby distinguishing it from other health insurers:
So, what are the advantages the CHTM model for its major stakeholders?
Maine residents have been surprisingly quiet in the face of the expected purchase of their Blue Cross and Blue Shield company by Indiana-based Anthem. Perhaps this apparent lack of concern arises because the public feels distant from and uncomprehending of the health insurance world. Perhaps it is because we have grown accustomed to seeing so many familiar businesses lose or at least substantially alter their Maine roots, sometimes disappearing completely from the states economic and social landscape.***
Perhaps it is because the public believes that the creation of a charitable foundation, a required byproduct of the acquisition of the nonprofit Blue Cross by for-profit Anthem, will fully compensate Maine for its loss. But lets apply this same logic to another, more accessible (if fanciful) transaction. Suppose for a moment that the Baxter State Park Authority were to announce plans to sell Governor Percival Baxters legacy including Mt. Katahdin, the essential and enduring landmark of Maine, to the good people of Indiana. Why not? After all, Maine could use the infusion of capital to improve its public infrastructure (think of this as a downpayment on the east-west roadway proposition). Hoosier State residents -- for whom mountains and clean surface water are novelties -- might be willing to put up $120 million (the amount Anthem has offered to acquire BCBSM) to add a little elevation and pristine water from Maine to their own otherwise uninteresting terrain and turbid lakes and streams. Imagine Baxter Park Authority officials deflecting criticism with: "Hey, the park will still be here, even if Maine no longer owns it. Sure, Indiana will now set the fees, determine land use, hire the staff, and control access to the Park. But, dont worry, officials from Indianapolis have assured us that they wont be making any substantive changes to Baxter -- even after paying the $120 million. Besides, we would set up a charitable foundation from proceeds of the sale of Baxter to Indiana so that more Mainers could use our other state parks "
Would Maines citizens find this arrangement odd, even disturbing? Would we speak out?
Whatever the basis for the deafening silence, the proposed acquisition of Blue Cross will not be good for Maine patients, those who pay the premiums, or the doctors, hospitals, and other providers who care for Maine residents. As a general rule MBNA appearing to be a notable exception -- out-of-state ownership is less likely to produce the level of commitment to civic duty and community life than companies whose owners reside in Maine, who share our traditions (and our winters), whose children attend Maine schools, who have a stake in the quality of life and vitality of the towns in which they reside. While the sale or transfer of Maine-based businesses may be good for shareholders, they seldom benefit employees or communities. These principles, I submit, are just as pertinent to health insurance as they are to any other sector of our economy.
Maine has been a leader in so many areas conservation of resources/recycling, environmental protection practices, a statewide EMS/trauma care system, smoke-free public venues, vocational/technical education, school reforms, prenatal care, reducing unintended pregnancies among teens. Why, then, should it be a passive observer of bad trends and ill omens in health insurance? ****
If the admittedly ludicrous example of the "proposed" sale of Baxter State Park to the State of Indiana would move us to act, what are we waiting for in the very real case of selling Blue Cross/Blue Shield of Maine to Anthem? If ever there were a time for our state motto, Dirigo ("I Lead"), to be animated anew for the benefit of present and future generations of Maine people, this is it. If ever there were an opportunity for this Governor and this Legislature to confer upon Maine residents a legacy as far reaching, lasting, and dramatic as the creation of Baxter Park decades ago, the transformation of Blue Cross and Blue Shield of Maine (BCBSM) into the Community Health Trust of Maine (CHTM) is it.
* For example, it is a lot less expensive to treat someones hypertension or diabetes with routine office-based care than to take of that same patient in a hospital emergency room or ICU who has developed complications arising from untreated hypertension (e.g., stroke, kidney failure) or untreated diabetes (e.g., peripheral vascular disease, blindness).
** Physicians opting for the fee-for-service model would be compensated according to a Resource-Based Relative Value Scale (RBRVS) method. To eliminate inconsistent and inequitable payment practices, a single conversion factor would be used for primary care physicians and specialists alike.
Hospitals opting for the fee-for-service model would be compensated according to common, universally applied fee schedules, Diagnostic Related Groups (DRGs) for inpatient admissions, and/or Ambulatory Payor Groups (APGs) for outpatient services. These extant categories may be modified to promote the provision of care in the least restrictive, most clinically appropriate setting. For example, hospitals might be eligible for up to two adjustments to account for differences in the severity of illness among patients: general/overall (especially relevant to referral hospitals which care for the most complicated medical conditions) and patient/episode-specific. To preserve access in rural areas and to encourage small rural hospitals to concentrate on essential, primary care services (rather than dabble in more remunerative procedure-oriented, interventional care), the Trust would pay federally recognized Critical Access Hospitals on the basis of their reasonable costs. Recognizing that all Maine hospitals must meet compete on a regional and even national basis to attract and retain key medical, technical, and administrative personnel; and, to avoid furtherance of the "two Maines" syndrome, there would be no intra-state wage/salary index adjustments.
*** Recent case examples of corporate changes which have had or are likely to produce significant ramifications for Maine people include Bass Shoe in Wilton (acquired by Chesebrough, then later closed), Hannaford Brothers of South Portland (a firm with a sterling reputation just acquired by the bigger-but-not-better Food Lion chain), Hathaway Shirt in Waterville (purchased by Warnaco, then closed, then subsequently reincarnated by a Maine-based syndicate led by former Governor John McKernan), Scott Paper in Winslow (purchased by Kimberly-Clark, then later closed), S.D. Warren Paper in Westbrook (acquired by Sappi, a South African concern, now being phased out), Dexter Shoe (sold to Berkshire-Hathaway, now shedding jobs in Piscataquis County), and Portlands UNUM (newly merged with Tennessee-based Provident.)
**** On the health insurance front, there is disquieting ferment. In addition to the proposed Blue Cross-Anthem deal, Tufts Health Plan, one of the top rated non-profit HMOs in the country, has announced its intention to exit the Maine market as of April 1, 2000. It is conceivable that Harvard-Pilgrim, another of the leading non-profit HMOs, may follow, thus leaving "unchecked" the major for-profit insurers: Cigna (which last year acquired Healthsource); and, Aetna (still assimilating U.S. Healthcare and Prudential into its midst).
Bruce D. Cummings, MPH
Last Updated: August 22, 2012
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