D.C., Maryland Blues Plans Come Together
MANAGED CARE February 1998. ©1998 Stezzi Communications
Insurance regulators in Maryland and the District of Columbia approved, with conditions, the merger of Blue Cross Blue Shield of Maryland and Blue Cross Blue Shield of the National Capital Area. The move creates the largest health insurer in the region. Regulators stipulated that the two plans continue to be charitable institutions and safeguard assets created with the help of decades of tax breaks. The deal, which the plans say will help them compete, will produce a regional not-for-profit holding company, with the two companies as subsidiaries.
The combined organization will have $3 billion in annual revenues, employ 5,000 and provide health coverage to 2 million subscribers in HMOs, PPOs and fee-for-service insurance programs. The merger could be a step toward conversion of the two plans to for-profit status.
Before any conversion, questions about the plans' legal status as charities must be resolved. If they are charities, their assets would go into a charitable foundation upon conversion to for-profit status.