Published August 2004

Kreidler rejects Premera’s plan to become for-profit

SCBJ Staff

Insurance Commissioner Mike Kreidler rejected Premera Blue Cross’ bid to become a for-profit company in July, saying the insurer’s conversion wouldn’t benefit policy-holders or the public interest.

The decision came after a nearly two-year application process by Mountlake Terrace-based Premera, the state’s largest health insurer and one of Snohomish County’s biggest employers. It contended that going for-profit would allow the company to invest more in technology and improving patient services.

“I have concluded that investor-driven profit margins and goals would put subscribers and the insurance-buying public at an unacceptable risk for excessive rate increases,” Kreidler said July 15, the day the decision was released.

In receiving the decision, officials at Premera said they would “respond accordingly in the near future.”

Washington state law gives the nonprofit company 30 days to appeal the decision to Thurston County Superior Court.

“On preliminary review, it appears to us that the decision is not consistent with testimony at the hearing and not consistent with the requirements of state law,” said Yori Milo, Premera executive vice president and chief legal and public policy officer.

If Premera decides to appeal, the court would have to rule based on the existing testimony and evidence submitted by all sides. Alternatively, the company also could ask Kreidler simply to reconsider.

But Kreidler said his decision was final. He faulted Premera’s application on several legal points, but also emphasized the negatives he saw for insurance customers.

“Although I agree with Premera’s contention that local management and autonomy best serve the insurance-buying public and subscribers, I believe that for-profit status brings with it a high likelihood that Premera would be acquired by a national insurer,” he said, pointing to acquisitions that resulted elsewhere when nonprofit health insurers converted in other states.

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