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Lobbyist Money Help  

Blue Cross Blue Shield Wants to Make a Profit

February 07, 1996
By: Emily Goodin
State Capital Bureau

JEFFERSON CITY - The Plans of Blue Cross Blue Shield to become a profit-making corporation has landed in the lap of Missouri's legislature.

That was the topic of discussion in the Senate Insurance Committee Wednesday during a debate over a bill that would allow non-profit health care plans to become for-profit.

The main target of the bill is Blue Cross Blue Shield of Kansas City, who has been in negotiations with the Missouri Department of Insurance for about six months concerning their ability to establish a for-profit subsidiary.

The main question concerns how much money Blue Cross Blue Shield, which covers 30 northwestern counties in Missouri, would owe the public, due to the tax exemption they receive for being non-profit.

The bill's sponsor, Sen. Ronnie DePasco, D-Kansas City, said the questions were how much does Blue Cross come up with, where does the money go, and what will it be used for.

Jay Angoff, director of the Department of Insurance, said if Blue Cross transfers the amount to the corporation that they would have paid in taxes in the past three years, it would be $5-6 million.

Angoff also referred to Blue Cross Blue Shield of St. Louis, which set up its own for-profit subsidiary in 1994, but are still in discussions with the Insurance Department because they haven't paid the public anything.

"They (St. Louis) disagree about what the law requires," Angoff said.

DePasco said if his bill passes, while it can't be retroactive, Angoff can use it to pressure St. Louis into paying. He said there is no comparison between St. Louis and Kansas City.

Also testifying against the bill was Peter DeSimone of the Missouri Association for Social Welfare, saying Blue Cross was for blue-collar families.

"Blue Cross now wants out of that business to join a new club. A new club of for-profit industries," DeSimone said.

Mike Marcotte of Blue Cross Blue Shield - Kansas City, said they would sell 20 percent of their stock to the public and use the money to compete with nationwide companies. He did say that more stock could be sold if more money was needed.

Tom Bowser, also of Blue Cross - Kansas City, said by selling 20 percent they would raise about $40-50 million.

"The cheapest place in the world to raise money is in public stock," Marcotte said.

DePasco said he expects Blue Cross and the Insurance Department to meet today for more discussions. The committee is also expected to meet today to vote to send the bill to the Senate floor.