Not-for-profit conversion process
June 5, 2001
The Business Council supports S. 2811, a bill to amend the insurance law to allow not-for-profit health organizations to convert to for-profit status. We support this bill for a number of reasons:
- It allows
health organizations more flexibility in a rapidly changing health-care
system. It is clear that the driving force behind this change is the desired
conversion of Empire Blue Cross and Blue Shield. They have made a compelling
case that they need to convert to be competitive with other insurers and
health organizations who have the ability to go to the market to raise
capital. Unlike the hospital system, which is nearly universally not-for-profit,
many of Empire's competitors are already for-profit. Allowing Empire to
attain for-profit status is not swimming against the tide.
- It would
provide an unprecedented amount of money for a charitable trust. The trust
could be a major force in improving the state's health-care system through
new, innovative initiatives in the areas of pharmaceutical coverages,
help for small businesses and the uninsured.
- It would
avoid costly and protracted litigation. Empire has been exceedingly patient
waiting for the legislature to codify the process and review conducted
by the Superintendent of Insurance. If Empire were to pursue its' goals
through the court system it would add a whole new complexity to the health
- It would provide for greater tax revenue for the state and bolster an important large New York State employer.
Current regulatory construct: Empire Blue Cross and Blue Shield has been through a lengthy review process. It has appeared before numerous public hearings and has been very forthcoming with information important to their restructuring plans. On December 29, 1999 they received the written approval of the Superintendent of Insurance to proceed, but have been impeded due to a question of statutory authority.
Conclusion: The Business Council has carefully reviewed a wide-range of documents dealing with Empire's proposed conversion and conclude that conversion is in the best interests of their customers, potential customers and the state as a whole. We would ask the Legislature to act on this legislation without further delay.