Back in 2002 they tried to convert to for-profit. It was quite a big to-do in the insurance industry. Jim Long, Commissioner of NC Dept of Insurance was instrumental in stopping them. Long is a democrat.
Blue Cross/Blue Shield has higher profits as a non-profit than most for-profit companies. Following are a few tidbits about the ordeal:
http://www.ncjustice.org/publications/details.php?id=280How Current NC Blue Cross Conversion Documents Allow Bilking of the Public Trust
08-08-2002
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As the first formal steps down the road to a possible conversion start, advocates should be very alarmed about the way things are going. Blue Cross's payment to the people of North Carolina to continue their historic non-profit mission of improving the health of the underserved would be 100% of their initial stock to a new nonprofit Health Foundation. However, complex legal agreements govern how much control the Foundation has as the largest stockholder over the new for-profit Blue Cross. These documents have just been filed with the NC Department of Insurance and the Attorney General.
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In the initial public documents that lay out how Blue Cross would convert a disturbing pattern emerges about these two critical major decisions regarding the company. Blue Cross would be able to give ridiculous and huge stock option packages, severance packages, etc. to its top executives. Sweetheart deals to sell the company could be made with the incentive being outrageous "golden parachutes" for those in the executive suite. The Foundation, as the major stockholder, would effectively have NO say in these decisions. Even worse, the documents SEEM to say the Foundation would have a say in these two major decisions but then use weasely lawyer-language to take that right away.
http://www.ncjustice.org/publications/details.php?id=238The consultants, hired by the state Department of Insurance, said Blue Cross failed to show how conversion would help it grow faster or expand outside North Carolina; defend itself against predatory pricing by competitors; tap new sources of investment or explain what that money would be used for; or develop innovative products and services. The report is part of the state Insurance Department's analysis of what conversion would mean for affordability and availability of health insurance.
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The consultants also found that
Blue Cross has a surplus larger than most of the top 20 health insurers and other large Blue Cross plans across the country.The company aims to keep profits at 4 percent a year to further build the surplus, the report said. The money is intended to see the company through tough times, but also to pay for expenses that could include buying a multistate life insurance company or computer technology over a five-year period. With those goals in mind, Blue Cross "must increase profit margins above those in the current business plan," according to the report. With tough competition for insuring large groups of employees, Blue Cross could raise rates for small groups and individuals, the report said. By converting, Blue Cross also risks takeover by a competitor if it fails to deliver the kind of profits investors expect, the consultants said.
http://www.consumersunion.org/conv/pub/statenc/In 1998, North Carolina passed a comprehensive conversion law that details the regulatory review that must be undertaken after a conversion proposal is made and that requires the full fair-market value of the assets to be set aside in a foundation.
In 2002, Blue Cross and Blue Shield of North Carolina (BCBSNC) filed with the Insurance Commissioner its proposal to convert to a for-profit corporation.
A sophisticated and politically savvy group of consumer advocates, led by the North Carolina Health Access Coalition (NCHAC), urged state regulators to carefully scrutinize the proposal. Enabled by the state’s strong health conversion law, NCHAC emphasized the risk involved in the company's attempt to maintain a virtual stranglehold over a foundation that would have been established to receive charitable assets in the conversion. Active consumer participation was well matched by responsible public officials who became concerned about BCBSNC and the Blue Cross and Blue Shield Association’s insistence that the company retain ultimate control of the stock that would have gone to the foundation. Under intense scrutiny, the company's efforts to argue that the conversion was good for consumers fell flat. Instead of suffering a rejection of their proposal by regulators, BCBSNC withdrew its proposal in July 2003.
http://hcrenewal.blogspot.com/2005/08/procare-claims-slapp-by-north-carolina.htmlProCare is a group initially founded by physicians and pharmacists to oppose the proposed conversion of North Carolina Blue Cross to for-profit status. The conversion did not take place, but ProCare, run by two well-known NC political operatives, one a Democrat, one a Republican, continued to operate.
In June, 2005, it released copies of internal Blue Cross documents revealing that Blue Cross had spent about $500,000 on expenses related to the US Open golf tournament. ProCare had previously revealed that Blue Cross spent about $600,000 on a Caribbean cruise for its brokers and sales agents. The context of these revelations included
Blue Cross' large surpluses, estimated to be around $350 million in 2003 and 2004, which had inspired state legislators to write bills constraining its surpluses and the size of its reserves.
Blue Cross Chief Executive Officer Bob Greczyn earned $900,000 in 2002, and more than $2 million in 2003.Blue Cross' response to ProCare's revelations was to file a law-suit against ProCare... quoted CEO Greczyn, "our customers depend on us to safeguard sensitive information every day. We're left with no choice but to act swiftly to protect our company against unlawful schemes to take and misuse confidential business information to further a narrow political or economic agenda."
Carter Wrenn, one of the leaders of ProCare, disagreed, "If you want to call this what it really is, it's harassment. They don't want to have anybody debating whether they're acting like a nonprofit." ProCare leader Gary Pearce added, "how can disclosing the fact that they sponsored the Open be private business information? They boasted about sponsoring the open." ...
...it appears that Blue Cross may have been spending more lavishly than befits a not-for-profit, and is far too uncomfortable having this publicized. Threatening a lawsuit that contends that confidential business information was released, unfortunately, seems to be becoming an all too common tactic for health care leaders who don't want to look bad in public. More transparency would be a wonderful thing for health care.