ANCHORAGE, Alaska – A public hearing is scheduled next week on a plan by Premera Blue Cross, the health insurance provider for about 115,000 Alaskans, to become a publicly traded corporation.
Mountlake Terrace-based Premera’s transformation from a nonprofit organization could mean hundreds of millions of dollars for Alaska and Washington state, but critics of the plan have questioned its effect on insurance rates and how the states’ money would be split and used.
Premera, a nonprofit since it was formed 58 years ago, has 1.2 million members in Washington besides its Alaska members.
Alaska officials have reviewed the plan for the past two years. Beginning Monday, Alaska’s insurance director Linda Hall will begin a weeklong public hearing.
A similar hearing was held last month in Washington, in which that state’s deputy insurance commissioner, James Odiorne, recommended that Premera’s conversion be denied. Washington state Insurance Commissioner Mike Kreidler is expected to decide by July 19 whether the conversion plan meets legal requirements.
Hall must give Alaska’s ruling by July 25.
Odiorne said he believed the proposed new Premera would have limited funding and wouldn’t transfer the full value of its assets to the states’ charitable foundations. Consumers could face rising rates, he said, and doctors could be paid less.
Amy McCullough, an Anchorage attorney, also asked that the conversion be denied. McCullough testified on behalf of the University of Alaska, United Way of Anchorage, Anchorage Neighborhood Health Center and a disabled man.
McCullough told Kreidler the conversion doesn’t provide peace of mind for people counting on affordable health care, doctors needing adequate payment for their services, or the public depending on a foundation funded with Premera’s full value.
Chief executive H.R. Brereton “Gubby” Barlow said at the hearing that competition from other insurers will assure that health care subscribers are treated fairly.
Premera officials have said conversion would make it easier to invest in technology and patient services, and the company has pledged to start a foundation that would provide up to $500 million for public health programs.
When a nonprofit corporation converts to a for-profit, law requires that its charitable assets go to another nonprofit, such as a foundation. If Premera’s conversion is approved, foundations in Washington and Alaska will share the proceeds as the company’s initial stock is sold.
Dr. Thomas Nighswander of the Premera Conversion Task Force said that “there’s a key piece of information we don’t know, and it’s going to be a controversy between the two states.”
Alaska’s financial consultants have recommended that Alaska receive a quarter of the proceeds, which could be about $150 million. A Washington insurance official recommended Alaska receive only 15 percent, which would be about $90 million.
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