Blue Cross Venture as For-Profit Unit

Thanks to Daniel Akst for the thoughtful article on the Blue Cross venture (“Rosy Forecast for Blue Cross For-Profit Unit,” Jan. 19). I hope it will be followed by further explorations of the issue of expanding for-profit ventures in the health care sector. I do not share your enthusiasm for this particular project, but your exposure of the details will inform the continuing discussion as the state and nation move to real reform.

I would be particularly interested in seeing you explore the issue of access to capital. You support this Blue Cross venture on grounds that a for-profit subsidiary will have more aggressive management and better access to capital. If so, how does it happen that (Blue Cross Chief Executive) Leonard Schaeffer--and I certainly agree with the praise you heaped upon him--has been giving his aggressive and imaginative leadership to a nonprofit operation? And if nonprofits are handicapped in access to capital, how does it happen that Kaiser Permanente continues to dominate the market with such high-quality care delivery?

You cited, if I understood correctly, as a Blue Cross success that “the proportion of premiums going for medical services has plunged to 72% from 92%, with no evidence that customers are being deprived.”

This is indeed a novel standard of social policy in the insurance sector. I have watched with fascination the terrible struggles to enforce among the for-profit medi-gap insurance purveyors a reasonable flow of funds, not for overhead and profit but for services. I had always thought that Medicare, for example, prided itself on the extremely low overhead of its operation. Indeed, at 72%, Blue Cross now ranks above the median in the health care sector of devoting 25 cents on the dollar to something other than health care services.


Thanks for pursuing these matters. The Times has been weak on medical economics, and your piece helps remedy that weakness. I hope the business news staff can enlarge its coverage.