Capital Blue Cross and Subsidiaries - Page 4

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               In its service area, petitioner provided (and continues to             
          provide) health insurance to individuals and to groups who                  
          entered into contracts with petitioner for health insurance                 
          coverage and who paid premiums for the coverage.  Consistent with           
          its social mission, generally the physical condition of                     
          individuals and of the individual members of the groups applying            
          for health insurance was not a basis for petitioner to decline to           
          provide health insurance coverage.                                          
               As of January 1, 1987, not including health insurance                  
          contracts that petitioner had entered into directly with                    
          individuals, petitioner had outstanding 23,526 health insurance             
          group contracts.1                                                           
               Generally, sponsoring organizations for each group contract,           
          such as employers, as well as the individual members of each                
          group were to pay premiums to petitioner, and petitioner was to             
          provide health insurance coverage to the individual members of              
          each group and, where applicable, to the spouse and to the                  
          dependents of each member.2                                                 

               1  Because a number of groups had entered into more than one           
          contract with petitioner, the 23,526 group contracts in effect on           
          Jan. 1, 1987, represented 12,579 separate groups.                           
               2  The manner by which the payment of premiums to petitioner           
          with regard to each group contract was divided between the group            
          sponsor and its individual members was decided by each group, and           
          petitioner had no say in that matter.  References herein to                 
          “premiums” do not distinguish between the portion thereof to be             
          paid by a sponsoring group and the portion thereof to be paid by            
                                                             (continued...)           





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