LANSING - With the general election over (results weren't available at press time), state legislators are turning their attention to some pending business in the lame duck legislative session that extends through the end of this year.

One of the top issues organized labor will be keeping an eye on is the proposed privatization of Blue Cross Blue Shield of Michigan (BCBSM). Gov. John Engler brought up the subject in his state of the state message in January, calling for "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."

Lawrence Reed, president of the ultra-conservative think-tank Mackinac Center for Public Policy, noted that the Michigan House and Senate did reject the notion of privatizing the Blues in legislation adopted last summer.

However, he wrote, "This is indeed an issue that requires much deliberate thought, is not well understood by the public, and is therefore easily demagogued, but that doesn't mean it's a bad idea. It may simply mean it needs to be better marketed, or dealt with in a less-politicized atmosphere. Indeed, it's a classic lame-duck session topic and for that reason, no one should assume the Legislature's rejection is the final verdict; if nothing else, time and growing problems will eventually force the issue."

Two bills in the Michigan legislature would allow the state Blues, with annual revenues of $10 billion, to be sold off to the highest bidder. One was introduced by state Rep. Tom George (R-Kalamazoo), the other by Andrew Raczkowski (R-Farmington Hills.).

With scores of union health and welfare plans utilizing the Blues, Democrats and organized labor have strong feelings against privatizing BSBCM. State Attorney General Jennifer Granholm issued a statement that cautioned Michigan legislators that selling or privatizing Blue Cross Blue Shield would violate current state law and would jeopardize the integrity of the public health system in Michigan.

"The citizens of this state struck a bargain with BCBSM more than 50 years ago," Granholm wrote. "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."

She added, "BCBSM was created with a healthy public - not a healthy profit - in mind."

More than 176,000 senior citizens who purchase "Medigap" health care coverage through BCBSM would be affected by a sale. The state's Office of Financial and Insurance Services (OFIS) estimates that more than 50 percent of the state's population depends on BCBSM for health care coverage and service. The Blues are often referred to as the state's "insurer of last resort" - and all that coverage would be placed in jeopardy with a sale.

Based on its 2001 financial examination of BCBSM, OFIS concluded that the insurer maintains a "strong market share" in Michigan, with 4.8 million customers and a surplus financial reserve of nearly $1.2 billion. OFIS called BCBSM "safe and solvent," but its financial examination did uncover some concerns, among them, losses in the small group market.

What are the advantages of privatization? The Mackinac Center's Reed acknowledged that the Blues' bottom line is healthy today, but the volatility of premiums could change the situation at any time. He said Michigan is the last state-controlled plan in the nation.

"Remaining a state-controlled plan for the foreseeable future," he said, "means facing increased state regulation, remaining an insurer of last resort, and having a diminished ability to service regional and national businesses because it will not be sharing a common vision, values and strategies with other BCBS plans."

William Shoemaker, a vice president of the UAW who sits on the BCBSM Board of Directors, said "you'll hear a lot from Republicans in the legislature, from their allies in the insurance community and from pro-business commentators about how privatizing Blue Cross will somehow mean cheaper and better health care. Don't you believe a word of it. They aren't out to expand access to health care, or to lower the cost of health care to working families."