Partnership of Promise

When medicare was still in the talking stage, most insurance companies protested that the Federal Government was proposing a massive raid on their territory. Once they found that they couldn't lick medicare, many insurance men decided to join it. For months, dozens of private companies have been competing for one-year renewable contracts, under which they would become "fiscal intermediaries" between the Government and the nation's 6,471 registered hospitals when medicare goes into effect. Last week, pronouncing the occasion "the beginning of a partnership of great promise," Health, Education and Welfare Department Secretary John W. Gardner awarded the first of these contracts to three organizations that already have health plans covering more than 82 million people: the Aetna Life & Casualty Co. and the Travelers Insurance Companies, both of Hartford, Conn., and the giant Chicago-based Blue Cross Association.

On the surface, the job would seem to offer only a vast and thankless chore. The three will be responsible for making payments to and supervising the performance of hospitals providing medicare services worth some $3.5 billion the first year. In return, the intermediaries will get only their administrative expenses. Still, there are some hidden assets. Insurance companies are planning supplemental policies to provide a host of benefits--hospitalization beyond 90 days, post-hospital drug expenses, etc.--not available under medicare. By their direct access to some 18 million persons eligible for medicare, the intermediaries will have the inside track on such policies. Moreover, as John Budds--who will head Travelers' medi care effort--explains, the intermediaries will be placed "in direct or indirect contact" with millions of oldsters' relatives under 65. This should give them an unsurpassed lead to the sale of insurance of all sorts.

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