From time to time throughout its 33-year existence, MESSA has recruited new underwriters for certain insurance plans in order to keep pace with varying market conditions. In response to the escalating cost of health care throughout the mid-1980s, MESSA sought alternative delivery systems for its health insurance plans. The search for a new system concentrated on MESSA's desire to control charges for medical services while preparing for future trends .48 After months of deliberation, MESSA decided in 1985 that a business arrangement with Blue Cross would best serve its needs.

For nearly 25 years prior to this, MESSA and Blue Cross had competed vigorously in selling health insurance to public school employees. While the Equitable Life Assurance Society was still underwriting MESSA's health plans, Blue Cross was offering lower prices to school districts for similar coverage. Unable to beat the competition, MESSA joined it, and a confidential operating agreement was formed between Blue Cross and MESSA.

The underwriting arrangement with Blue Cross is organized in such a way that MESSA is able to design the benefits of each plan. Once the plans are established, they are consigned to Blue Cross for underwriting purposes. Blue Cross calculates the assumed risk of the plans and charges MESSA for the protection. Even though Blue Cross underwrites the plans and guarantees coverage, MESSA retains the predominant share of administrative responsibilities. Although this arrangement does not violate any law, it does not function in the public's best interest, because it entails unnecessary costs that result from poorly designed benefit structures.