CHICAGO, Aug. 10 (UPI) -- Blue Cross and Blue Shield health insurance plans in six states want to combine to create what officials described Thursday as the largest non-profit health insurance organization in the United States.

      Officials with Health Care Service Corp., which oversees Blue Cross plans in Illinois and Texas, want to combine with the Regence Group, which oversees Blue Cross plans in Idaho, Oregon, Utah and Washington, to form an organization that would provide health care benefits to about 10 million people.

      The new organization would keep the Regence name, although headquarters for the combined operation would be at Health Care Service Corp. offices in Chicago, with a secondary office in Portland, Ore.

      Officials with both companies said that a single venture would be able to merge adminstrative functions, thereby reducing expenses and offsetting increases in health care costs.   The organizations stressed, however, that the combination would be an affiliation, not a merger, and would remain not-for-profit, although it is possible in the future they would set up a for-profit operating company to handle back shop functions.

      Health Care President Raymond McCaskey noted that a previous merger of Illinois and Texas functions into one organization resulted in $100 million annual savings.   "We have experience in this type of combination," he said. "It is not unreasonable to expect we can match those savings in this deal."

      Another benefit would occur to people in the smaller states covered by the combined company -- they would gain access to health care programs and services that previously had been offered only in the larger states.

      "We have to grow larger if we are to make significant leaps forward," Regency Chairman Richard Woolworth said. "Our two organizations have taken a huge step forward so we can remain major players in the health care industry."

      The combined company calls for one board of directors and one management team.   But McCaskey said the Blue Cross and Blue Shield names will be retained in individual states, with local officials given some autonomy over providing health care benefits to their customers.

      "There will still be separate legal entities in each state, in much the same form as they exist now," McCaskey said. "This is not a traditional acquisition where one entity absorbs the other.   "We are going to allow for autonomy but we will work together and will not let ourselves be weak or disadvantaged in any of our locales," he said.

      The deal still needs government regulatory approval before it can take effect, although both McCaskey and Woolworth were optimistic approval would come this year or early in 2001.   Health Care Service Corp. began in 1936 as Hospital Service Corp., with the Blue Cross symbol adopted in 1939. Blue Cross and Blue Shield of Texas merged with the corporation in 1998.