Michigan Attorney General Jennifer Granholm on March 1 cautioned Michigan legislators that selling or privatizing the financially troubled Blue Cross Blue Shield of Michigan (BCBSM) would violate current state law and would jeopardize the integrity of the public health system in Michigan.

In his January 2002 State of the State message, Gov. Engler proposed "a new act to create a Community Health Trust Fund to protect our citizens and capture the public benefit should Blue Cross ever follow the path of more than 20 other state plans by becoming a private company."

In a letter to the newly created Michigan House Committee on Health Insurance, Granholm said the Michigan legislature established BCBSM as a nonprofit, charitable, and benevolent institution expressly for the purpose of fulfilling the health care needs of Michigan residents.

"Blue Cross was never intended to function as a for-profit insurer," Granholm said. "The company's legislatively established mission is to promote reasonably priced health care services for all residents of Michigan. It is difficult to comprehend how turning BCBSM over to for-profit insurers would lower the cost or improve the availability of health care in Michigan.

"The citizens of this state struck a bargain with BCBSM more than 50 years ago. The citizens agreed to give BCBSM tax-free status and in return, BCBSM agreed to take on responsibility for providing health care services at fair prices to all citizens who apply for coverage. That's the deal. By selling BCBSM off, the state would be breaking the deal it made with its own citizens."