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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.

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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.

LOUIS B. FLEMING

Pasadena


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