NU Online News Service, Oct. 8, 2004, 5:19 p.m. EDT

Moody’s Investors Service, New York, might raise the debt rating of the company that controls the Blue Cross and Blue Shield plans in Illinois, Texas and New Mexico.[@@]

The company has placed the debt rating of Health Care Service Corp., Chicago, under review for possible upgrade.

Moody’s has given Health Care Service a Baa1 rating on its senior unsecured debt and an A3 rating on its insurance financial strength.

Moody’s is reviewing the debt rating because of Health Care Service’s “continued improvement in after tax earnings margin, increasing membership, and capital growth,” Moody’s says.

Health Care Service has one of the highest earnings margins and commercial membership growth rates in the industry, Moody’s says.

But Health Care Service also faces the same exposure to regulatory changes and rising health care costs as its competitors, and it could expose itself to new integration headaches by making an acquisition, Moody’s says.