The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Two largest "for-profit" Blue Cross firms merge

Nov 3, 2003

WellPoint Health Networks, Inc. and Anthem, Inc. are merging. Between the two, they currently control Blue Cross Blue Shield plans in 13 states, providing the health insurance for 26 million people. That's 13% of all Americans with private health insurance and 30% of all those covered by a Blue Cross plan.

The two companies are the product of the move to convert Blue Cross Blue Shield plans from "non-profit" to "for-profit" companies. That's not to say that the so-called "non-profit" Blue Cross companies weren't producing profits before; they were. They were conduits for profits to the pharmaceutical industry, the medical supply industry, the hospitals, banks and others that fed off the medical industry. In addition, some ran for-profit subsidiaries, like their own HMOs or even, for example, lawn care companies whose only business was to take care of the company grounds.

But the so-called "non-profits" weren't producing as much profit as the big financial interests and big banking houses thought could be produced by the medical insurance industry. It was Wall Street that underwrote the transformation of some Blue Cross Blue Shield plans into openly for-profit enterprises.

The profits of WellPoint and Anthem show that these profits can be immense. Last year, their profits totaled over 440 million dollars. They expect that the merger will result in 250 million dollars in additional profits by 2006.

The companies' profits grew by over 15% last year, fueled by increases in their premiums that are rising faster than the rate of medical inflation. That's the medical inflation rate – which is much higher than the general rate of inflation!

Corporations that don't want to pay higher health insurance rates for their employees and consumer groups representing insured individuals have fought against further Blue Cross conversions. In some states, legislatures blocked the conversions.

So the moneyed interests that pushed to convert more Blue Cross plans to "for-profit" ran into a kind of roadblock.

But there's more than one way to skin a cat – and Wall Street is hip to all of them. Today they are creating a huge health insurance mega-monster, hoping to drive smaller health insurance companies out of business and make higher profits possible further down the line.

This process has nothing to do with providing quality health care to people who need it. Wall Street analysts have already said that the new company will "pursue small businesses and the uninsured by offering lower-cost policies that shift a bigger share of the growing tab for health care to patients." In other words, profits are to be made at the expense of workers' health care benefits.