Schaefer's health insurance mess

November 18, 1993

What a debacle Gov. William Donald Schaefer has staring at him! It now turns out that the state has failed to pay Blue Cross and Blue Shield to the tune of $113 million. Ouch.

An imperious personnel department is largely to blame, although budget officials are also at fault. Blue Cross, which manages the state's self-funded health insurance program for 87,000 workers and retirees, also should have spoken up louder as the government's monthly IOUs grew larger and larger. Given the fact that Blue Cross was perilously close to insolvency during this time, it is troubling that Blues officials didn't make sure the governor knew how their ailing company was being treated by state government.

Governor Schaefer has been poorly served by personnel and budget aides, people he trusted. State legislators are rightly demanding that those responsible for the debacle be fired. After all, it was the cavalier attitude with which some government officials handled this matter that created this mess. When policy is bungled this badly, the governor needs to take swift action.

State workers will pay for these mistakes through higher premiums, especially in the most popular plan, the Preferred Provider Network, where their charges will double. State taxpayers will suffer because $73 million in revenue that could have been earmarked next year for social service programs will now have to be diverted to pay off a portion of this debt.

Additionally, Maryland budget officials want to postpone paying $38 million of state indebtedness to Blue Cross and Blue Shield until sometime in the future. That might make sense to officials trying to balance next year's budget, but it imperils the state's largest non-profit health insurer.

Blue Cross continues to be in shaky financial health, earning only $2 million in the third quarter of this year. The governor should see that the Blues are paid in full in order to help stabilize their situation.

Maryland's ability to maintain its Triple-A bond rating could also be put at risk next year if the Schaefer government postpones paying off major financial obligations of this sort. General Assembly leaders should strongly resist such an effort. It is bad nTC enough that Maryland is shortchanging Blue Cross and Blue Shield when the health-insurance company desperately needs the money, but to burden a future governor and legislature with this debt is just plain wrong.

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