Governor backs insurance commissioner's veto of Blue Cross reorganization

January 27, 1995|By John Fairhall | John Fairhall,Sun Staff Writer

Expressing "great confidence" in state insurance commissioner Dwight K. Bartlett III, Gov. Parris N. Glendening said yesterday that he fully agreed with Mr. Bartlett's rejection of Blue Cross and Blue Shield of Maryland's reorganization plan.

"You can't do it under the law," Mr. Glendening said in a brief interview. It was the governor's first public comments on the nonprofit insurer's proposal to create a for-profit subsidiary that would sell stock to investors. The plan, submitted last fall, was rejected by the commissioner Monday.

Noting the company's desire to keep valuable tax exemptions granted only to nonprofits, the governor said: "You can't be a for-profit and a nonprofit." He said the plan seemed to be an example of trying to "have your cake and eat it too."

The governor's comments, and those of legislative leaders, made clear the state's largest health insurer is unlikely to receive help from the General Assembly this year. But Mr. Glendening put his blessing on the company's wishes to talk with Mr. Bartlett and other state officials about its goals and needs.

"That would make good sense for the corporation and the public interest," Mr. Glendening said.

Mr. Bartlett said yesterday that he has told Blue Cross that he is ready to organize a meeting. Separately, a company spokeswoman said: "I do think we're going to be talking with all the parties involved." No meetings have been scheduled.

Mr. Bartlett, in announcing his rejection of the reorganization plan, said it would violate state law. But he has expressed sympathy with Blue Cross' goal of raising capital, which was to be accomplished by a public sale of about $40 million of stock this year -- a step blocked by Mr. Bartlett's decision.

Although appointed by Mr. Glendening's predecessor, former Gov. William Donald Schaefer, Mr. Bartlett evidently has earned the new governor's respect. Mr. Glendening went out of his way to say he has "great confidence" in the commissioner, who is nearing the halfway point of his four-year term.

William L. Jews, Blue Cross' president and chief executive, was surprised by Mr. Bartlett's decision, according to people who have spoken to him.

But he has moved quickly to try to build support in the General Assembly for his goals. He spoke before a House of Delegates committee Tuesday, and will appear before the Senate Finance Committee next week, according to Sen. Larry Young, a Baltimore Democrat who chairs a health subcommittee.

"I don't think there will be any legislative remedy in 1995 for Bill," Mr. Young said yesterday, ruling out passage of a law to help the company bypass the legal obstacles Mr. Bartlett cited in his decision. "But [Mr. Jews] has a tremendous amount of goodwill down here."

Mr. Young said legislators "can't interfere with the day-to-day operations of the insurance commissioner. And Bill understands that. One reason why you probably won't see any legislation this session is because that would be seen as a direct slap at the insurance commissioner, who at this date has more information than we have."

If legislators learn through discussions with Mr. Jews and Mr. Bartlett that state law needs to be changed, the General Assembly can do that in 1996, Mr. Young said. In the meantime, he said, Mr. Jews needs to gain the support not only of legislators but also their constituents -- the 1.4 million Blue Cross subscribers, some of whom have been skeptical of the company's motives.

House Speaker Casper R. Taylor Jr. said yesterday that he hoped Blue Cross would revise its reorganization plan and resubmit it to Mr. Bartlett.

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