Not-for-profit conversion process



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 insurance marketplace.
  • 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.