Msc, Blue Cross Solidify Bond Health Insurers To Offer Each Others Product Lines To Their Customers

Premera, the largest provider of health insurance in Washington, next month will throw another stitch into the bond between its two major subsidiaries.

Medical Service Corp. of Eastern Washington and Blue Cross of Washington and Alaska will begin offering each other’s product lines to customers in their service areas, said Premera President Betty Woods.

Now, she said, potential Blue Cross customers in Eastern Washington must purchase those coverages through a separate sales office.

Woods added that any thought of abandoning the Blue Cross products was discouraged by brokers who said their clients wanted continued access to both insurance lines.

MSC and Blue Cross are also well-recognized brands in their respective areas, she said.

MSC is a Blue Shield licensee.

The consolidated sales operation in Eastern Washington will be the responsibility of MSC President Henry Keaton.

He has also been responsible for knitting together the relationships between MSC, physicians and hospitals that Woods said are gradually transforming Premera from a company that simply processed claims and paid medical bills into a health care company that helps its subscribers manage their health.

“We have to build different skills than we had three years ago,” when MSC and Blue Cross first combined under the Premera umbrella, she said.

Woods noted that the management structures of Premera and its subsidiaries have undergone a significant overhaul in recent months.

Individuals with expertise in clinical, information systems, underwriting and other fields have taken key positions with the various operations, she said.

The goal, she said, is maximum consolidation of administrative services as a way of holding down costs while improving the delivery of health services.

The changes have helped Premera land accounts like Seafirst Bank, Woods said.

Premera subsidiaries insure 1.2 million individuals in Washington, Oregon and Alaska. Revenues are $1.4 billion.

Besides MSC and Blue Cross, Premera also includes Healthplus Inc. and Portland-based Lifewise.

Woods said Premera has 23 percent of the health insurance market in Washington as a whole, 30 percent in Eastern Washington alone.

Employment has increased to 2,100 since the alliance was formed, with 450 of those in Eastern Washington, up 50 percent.

Woods said the growth has not come without problems.

Over the last three years, Blue Cross has lost $58 million on individuals who do not participate in group plans, she said.

Although a settlement with the Washington Insurance Commissioner’s Office provided sufficient relief to assure rates will not be raised for the remainder of 1997, Woods said, “We will need another rate increase next year.”

She said Premera will sustain an underwriting loss this year, but its size is not yet known.

, DataTimes