Blues May Go Private

LANSING-Great minds think alike: In its Winter 2002 issue, MPR published “Privatization and the Blues” in which it advocated privatization of Blue Cross Blue Shield of Michigan (BCBSM), a quasi-public, nonprofit health insurance firm that controls over 50 percent of the health-insurance market in Michigan.

In his January State of the State address, Gov. John Engler also announced his desire to see BCBSM change from its current setup into an investor-owned, private, for-profit business model.

This would not only help Michigan consumers, but would also help BCBSM stay competitive, raise needed financial capital, and offer management flexibility that is impossible under the current arrangement. It would also stop the hemorrhaging of funds-BCBSM has lost around $400 million in the past five years.

Of course, some oppose the move. In an Ann Arbor News commentary, BCBSM Senior Vice President Richard Cole said the proposal “jeopardizes the Blues’ historic mission.” But if that were true, Blue Cross as a force on the national health care scene would be in serious trouble. It just so happens that BCBS affiliates in 14 states nationwide have done the very thing Cole says would jeopardize their mission- converted to investor-owned companies-and they’re doing better than ever. In fact, Michigan’s BCBS affiliate is the last state-controlled plan of its kind in the nation. The Blue plans in states that surround Michigan-those in Ohio, Indiana, Illinois, and Wisconsin-have consolidated or become stock companies.

The only mission privatization jeopardizes is BCBSM’s historical tendency to operate in the red. To track the progress of legislation designed to privatize BCBSM (HB 6046) visit