HELENA -- After a firestorm of criticism from employees, the president of Blue Cross and Blue Shield of Montana this week retracted a message he sent to employees six days earlier announcing they would face higher health insurance costs for the upcoming year.

Peter Babin, president and chief executive officer of the company, sent an e-mail to company employees Tuesday telling employees he was pulling back the e-mail he sent Oct. 20 that announced the increases in their health care costs.

''Many of you have expressed dissatisfaction with that arrangement, and senior staff and I want to be as understanding of your concerns as current circumstances will allow," said a copy of the e-mail, provided by an employee to the State Bureau. ''We will go back to the drawing board to look at other possibilities, but there is no question that we need to increase premium cost sharing with our employees in 2005 and, very possibly, in later years if our medical program cost trends continue at the present rate."

On Oct. 20, Babin notified the 775 Blue Cross Blue Shield employees of increased health insurance costs. He said the not-for-profit company, like all employers, was striving to keep its health insurance costs as low as possible.

''Furthermore, as you undoubtedly know from recent press articles, the board of directors is putting tremendous pressure on management to reduce administrative expenses (which include the company's contribution to our group health insurance program)." Babin wrote, noting that the group's medical experience costs rose by 20 percent.

He was referring to a memo from the board of directors' finance committee that called for a series of drastic changes in how the company was run to cut administrative expenses. Although Babin blamed the committee's memo, in part, for the recommendations, company sources said the top management has been talking for months about the need to raise employees' health insurance costs.

Many Blue Cross Blue Shield employees were outraged by Babin's Oct. 20 announcement and were highly critical of his salary and benefit package disclosed in Lee Newspaper State Bureau stories on Oct. 17 and 18. Some said they were embarrassed to work for the company after learning of Babin's salary and benefit package, estimated at $1.4 million annually, including payments to cover his retirement plan.

They expressed their anger as ''feedback" in various meetings organized by divisions of the company. The membership area employees had 42 comments, while other employees of other divisions of the company expressed their views in different ways.

Some customer services representatives said they are encouraged to wear clothing promoting ''the Blues" but were catching flak from people outside the office about the negative image of the company because of the press coverage about Babin's salary and benefits.

''Employees have commented that they've been confronted in the street, at the bank, in restaurants etc.," the report said, adding that employees are not only dealing with the negative image of the company but the prospect of increased health care coverage costs.

Here's a sampling of the anonymous feedback from reports given to the State Bureau by employees:

- "We have received several comments from our group leaders/contacts regarding the newspaper article. They are asking, 'What is going on with BCBSMT,

why are you cheating

Montanans?' "

- "I have been working here for 30 years, and this is the first time that I have been ashamed, disgraced and embarrassed to say that I work for Blue Cross Blue Shield of Montana. I will not wear my ID badge outside of work."

- "If the company is OK with paying for doggie day care, why can't it contribute to childcare?" That was a reference to Blue Cross reimbursing Babin $25 a night to have a dog sitter stay in his house with his three dogs when he and his wife are traveling on company business.

- "How come executive levels are paid at national wages, but lower level employees are not?"

- "It is pretty sickening that an executive's wife will have a better retirement package than employees that have given 20, 30 years of service to this company." This was a reference to the benefit restoration plan awarded to some top executives such as Babin. When they retire after meeting certain criteria, they receive, for life, 100 percent of the annual average of their top five years of salary. This includes their company pensions and Social Security. When they die, their spouses receive 75 percent of this payment.

- "Any smart business manager knows that if you need to cut administrative costs, you need to cut out the non-essentials and the 'heavy hitters.' Employee benefits should never be cut. What about buying cost-effective furniture for executives vs. excessive cherry furniture? What about flying coach and having family members pay their own way like the rest of us? Cutting executive salaries and benefits just by even 3 percent would have a bigger impact than cutting salaries on 500 employees (which is basically what you are doing by lowering benefits)."