MOUNTLAKE TERRACE – Alaska’s insurance director has ruled that Premera Blue Cross can’t convert into a for-profit company unless the insurer changes its proposal.
The decision follows the denial of the company’s conversion request by Washington’s insurance commissioner two weeks ago. Premera has until mid-August to appeal that rejection, but so far has not indicated whether it will.
Premera representatives said they found some positives in the Alaska ruling, in contrast with the unequivocal rejection issued by Washington Insurance Commissioner Mike Kreidler.
“These are very different decisions in a lot of ways,” said Scott Forslund, a spokesman for the Mountlake Terrace-based insurer. “This one clearly recognized significant potential benefits from a conversion.”
Alaska Insurance Director Linda Hall wrote in her ruling that Alaska’s unique geography and demographics present challenges to private insurers.
“To the extent Premera’s proposal further strengthens its financial standing and opens the door for increased services in Alaska or even additional competition in the state, it is in Alaska’s interest to give serious consideration to the proposal and to fully explore how the proposal might be implemented in Alaska to best service Alaska’s insurance consumers and the public,” Hall wrote.
She nonetheless felt compelled to disapprove the conversion application as “unfair and unreasonable to Alaska policyholders and not in the public interest” in its present form.
Because Premera’s conversion would free it from state reviews of its premium rates, end certain tax exemptions and put it under shareholder pressure to improve profit margins, Hall concluded the company likely would raise its rates.
There’s also the practical matter that as a Washington-based insurer, Kreidler’s rejection of the conversion prevents Premera from operating as a for-profit in either state, Hall added.
She outlined 13 changes Premera needs to make to its proposal to warrant Hall’s reconsideration. As with the Washington ruling, Premera has up to 30 days to appeal Hall’s decision.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
