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NEW YORK TIMES REPORT ON BLUE CROSS PLANS

 NEW YORK TIMES REPORT ON BLUE CROSS PLANS
 DETROIT, July 20 /PRNewswire/ -- The following was released today by


Blue Cross and Blue Shield of Michigan:
 Today's (Monday, July 20) New York Times contains an article that suggests that a "money shortage puts Blue Cross on shaky ground." The article states that, as a result of a recent report by Weiss Research, Inc., 17 of the 73 Blue Cross Blue Shield plans in the United States are in financial difficulty. Blue Cross and Blue Shield of Michigan is not one of the 17 plans.
 It is important that media outlets following this story understand that the Weiss Report confirmed the financial soundness of Blue Cross and Blue Shield of Michigan. The plans referred to in the N.Y. Times article are 17 plans which received a D or E "Weiss Rating" on financial soundness in 1990.
 Weiss, Inc. rated 70 percent of all U.S. Blue Cross Blue Shield plans C or better. Michigan was included in this group as a "company that offers fair financial security and is currently stable. But during an economic downturn or other financial pressures, it may encounter difficulties in maintaining its financial stability."
 The N.Y. Times article also says some of the 73 Blues plans operate for-profit subsidiaries at a loss. The Blues in Michigan disposed of its for-profit subsidiaries by action of its board in 1988.
 In light of the New York Times article, several points about Blue Cross and Blue Shield of Michigan may need to be reinforced:
 -- Financial soundness. While losses on individual lines of business are an ongoing challenge, reserves meet PA 350 requirements. Administrative costs as a percentage of subscription income are among the lowest of comparable Blue Plans; and far lower than commercial insurance firms.
 -- Regulatory oversight. PA 350 of 1980 may be the most detailed and stringent state regulatory law governing any BCBS plan in America. It sets forth a public role for BCBSM which has been embraced in the company's mission statement.
 -- Consumer control. Customers, the public, and consumers together account for 74 percent of the seats on the board of directors. The board as a whole, through committees, exercises close oversight of all aspects of the company's operations and activities.
 -- Market strength. BCBSM covers nearly 50 percent of all Michigan citizens. Approximately 40,000 employers, including the largest, have BCBSM coverage or administrative contracts. The company is performing strongly in the group market where it is sold directly and through independent agents and professional associations.
 -- Public mission. Blue Cross and Blue Shield of Michigan is a private, nonprofit corporation with a public mission. Many consider it the insurer of last resort in the state. It does not engage in medical underwriting (illness redlining.) It has contracts with all of the more than 200 Michigan hospitals and more than 70 percent of all Michigan physicians. It operates several public-service activities such as the Caring Program for Children which provides medical care at no cost to children of the working poor. It is also the federal government's Medicare administrator in Michigan.
 -0- 7/20/92
 /CONTACT: Rude Difazio of Blue Cross and Blue Shield of Michigan, 313-225-8113/ CO: Blue Cross and Blue Shield of Michigan ST: Michigan IN: INS SU:


DH -- DE018 -- 0796 07/20/92 13:48 EDT
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Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Publication:PR Newswire
Date:Jul 20, 1992
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