ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, June 18, 1996 TAG: 9606180089
SECTION: BUSINESS PAGE: B-5 EDITION: METRO
DATELINE: RICHMOND
SOURCE: Associated Press
MEMO: ***CORRECTION***
Published correction ran on June 19, 1996.
An Associated Press article published Tuesday about Trigon Blue Cross
Blue Shield was incorrect on several points: It said that only some
policyholders would become stockholders if the company is converted; it
erroneously re[ported that Trigon officials said the insurer could go
bust if the conversion is not allowed; and it incorrectly attributed a
comment about increasing health insurer competition. That statement was
made by Donald Moran of the health care consulting firm Lewin Group Inc.
of Fairfax.
Trigon Blue Cross Blue Shield says if government regulators and its policyholders don't allow it to convert to a stock corporation, the Virginia health care giant could go bust.
Trigon, a mutual insurance company owned by its policyholders, on Monday released more than 800 pages of testimony from company officials and eight industry, financial and legal experts. It was aimed at the State Corporation Commission, which begins hearings Sept. 9 to decide whether to allow Trigon to convert to a publicly held stock company.
``Over the next 18-24 months, we will see the emergence of a few large competitors who alone will survive in the increasingly competitive world of health insurance,'' said Dr. David Salkever, a Johns Hopkins professor in economics and health care and an expert witness for Trigon, the documents showed.
Trigon spokeswoman Brooke Taylor said the ability to sell stock on Wall Street will help policyholders because the company would be able to grow and larger companies can bargain with hospitals and doctors for better rates.
Trigon has 1.8 million policyholders. While that is large for Virginia, Taylor said national companies are ready to come into the state. To stave off takeovers, she said the firm needs more capital.
``If [the conversion] doesn't pass, as a mutual company we only have two ways to raise capital - and I don't think either benefits the policyholder,'' she said.
Either the company can use its reserves - the money it keeps on hand to pay claims in case of economic downturns - or it can borrow, meaning it would pay interest on debt.
``The conversion itself would not affect premiums or coverage, but it would help us keep the same options people have now over the long term,'' Taylor said.
Two-thirds of Trigon's policyholders and the SCC have to agree to the conversion plan before it can be approved.
But some policyholders are suspicious of Trigon's motives, because not all would become stockholders after the conversion. Only stockholders will have a voice if the company becomes a stock corporation.
LENGTH: Medium: 61 linesby CNB