Some consumer groups fear Blue Cross and Blue Shield of Maine's attempt to convert to a mutual company is the first step to creating a publicly traded stock corporation.
Conversion from a not-for-profit would exempt the insurer from some oversight, creating the potential for higher rates, critics say.
"Once you go from a nonprofit organization to one that answers to its shareholders, that changes the mission of the company drastically," said Joe Ditre, director of the Maine People's Alliance.
Blues officials say their company has no plans to become a stock corporation, but they agree that changing the corporate structure would exempt the company from some forms of regulation.
The company argues that the growth of for-profit managed-care competitors-such as Healthsource Maine and NYLCare Health Plans of Maine-makes the change necessary.
"We've reached a point where we really have to level the playing field," said Edward Kane, a Blues senior vice president.
The Blues plan has lined up legislative leadership to sponsor a bill that would direct the conversion. A public hearing is set for this week before the Legislature's Banking and Insurance Committee.
The Blues is Maine's largest health insurer, with roughly 484,000 residents in managed care and traditional forms of coverage.
The concerns of consumer groups center on the 21,000 nongroup members and 79,000 elderly residents with Medicare supplemental coverage. These plans are subject to rate review by the state Bureau of Insurance.
Rising healthcare costs in the 1980s put great financial pressure on the Blues system. Some states, including Maine, enacted laws in the early 1990s requiring insurers to follow the Blues model and cover all residents.
But as a not-for-profit organization, the Blues does business differently from many insurers.
The company took in $497 million in premiums in 1994. It used most of it-$446 million-to pay member claims for medical care. The rest went to pay overhead and to maintain a reserve account to cover future claims and expenses. Reserves in 1994 were $112 million.
Because the Blues doesn't make a profit, it pays no state taxes. But the plan complains that it now has to endure a level of regulation avoided by most of its competitors.