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152 West Johnson St. Madison, WI 53703-2213 |
16 N. Carroll Street, Suite 400 Madison, WI 53703 |
1535 Mission Street San Francisco, CA 94103 |
SAN FRANCISCO, CA and MADISON, WI - In a letter sent late yesterday, national and local consumer groups called for a public process to review the decision by Blue Cross and Blue Shield United of Wisconsin to convert to a for-profit corporation.
"Without a process to assure that the people of Wisconsin receive full fair market value for their nonprofit insurance plan, millions of dollars could be lost," said Robert A. Peterson, Executive Director of ABC for Health. "Without a public process to determine the appropriate recipient of Blue Cross and Blue Shield's nonprofit assets, there is a great risk that those most in need of health resources will be left behind."
Late last week, Blue Cross and Blue Shield United of Wisconsin (BCBSWI) announced that it would convert its entire operation to a for-profit company. The announcement came on the heels of the Attorney General's rejection of a request by consumer groups last year to investigate transactions that occurred between the nonprofit plan and its for-profit subsidiary, United Wisconsin Services, Inc. Many of the questions raised by consumer groups regarding the transfer of nonprofit assets to the for-profit subsidiary remain unanswered today.
Throughout the country, as other nonprofit BCBS plans have proposed to convert to for-profit, regulators have engaged the help of independent experts to be sure that the full fair market value of the plans is preserved. In California, Blue Cross offered to set aside $100 million in a nonprofit foundation. After the Corporations Commissioner hired outside experts to value the nonprofit plan, more than $3.2 billion was set aside. In Missouri, a trial court has raised serious concerns about a proposed settlement of a BCBS conversion in that state. The court questioned whether the set-aside amount proposed by BCBS represents the full value of the nonprofit and suggested that putting the plan out for bid or auction may be the only way to preserve its nonprofit value.
Furthermore, regulators in states such as New York, California, New Hampshire, Colorado, North Dakota, and Missouri have initiated formal procedures to allow the public to review BCBS conversions. The public has participated in the deliberations about the type of foundations that will receive the nonprofit assets, as well as in discussions to determine the mission, governance, and structure of such foundations.
"There are fundamental preliminary questions that must be asked and answered in a public process before letting BCBSWI abandon its nonprofit purposes and become a for-profit stock company," said Jeff Spitzer-Resnick, Managing Attorney, Wisconsin Coalition for Advocacy. "Our Attorney General sponsored legislation last year to ensure that there was a thorough and involved public process before a nonprofit hospital in this state can convert. Doesn't the public deserve as much when our largest insurer decides to convert from nonprofit to for-profit?"
"We still don't know if the assets that Blue Cross transferred to United Wisconsin Services were properly valued," continued Spitzer-Resnick. "As representatives of health consumers, we want the opportunity to ask questions and be assured that the answers are in the best interests of the public."
"It is the people of Wisconsin who are the 'shareholders' of Blue Cross and Blue Shield," said Jaemin Kim, staff attorney with Consumers Union. "Blue Cross, its management and its board of directors do not own the plan. They are not making a 'donation' or 'gift' to Wisconsin. They are fulfilling an obligation they have to the people of Wisconsin. They must ensure that nonprofit assets that have been built in the community for more than fifty years continue to be used for the same nonprofit purposes, even if the plan changes to a for-profit company."
In addition to the groups mentioned above, HealthWatch, a major coalition that advocates for access to quality health care for low-income families in Milwaukee County, has endorsed general principles that require a complete inquiry and public input for decision making on how to use health care conversion funds.
[Note: Please call Consumers Union, 415/431-6747, for copies of last year's letter to the WI Attorney General and other background materials on nonprofit health plan conversions.]
Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization, serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.
ABC for Health is a Wisconsin-based nonprofit public interest law firm dedicated to ensuring health care access for children and families.
Wisconsin Coalition for Advocacy is Wisconsin's protection and advocacy agency that advocates for the rights of people with disabilities.
