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Troubling signals

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Blue Cross still may be gearing up for conversion.

By Rob Schofield

[06.01.04] — One of the most contentious debates to confront North Carolina in recent years concerned the proposed conversion of Blue Cross/Blue Shield North Carolina to a “for-profit” corporation.

While strong opposition from the health and nonprofit communities helped torpedo the conversion idea, recent developments are causing some to worry that the giant insurer may yet be positioning itself to enter the for-profit market.

Evidence has come to light since the date of the decision not to convert that “Blue” accumulated nearly $200 million last year in what amount to “profits.”

The revelation has raised red flags for many who question the appropriateness of – and need for — a massive fund buildup at a time when the number of uninsured is rising fast.

These concerns have been aggravated by additional revelations that Blue rewarded its top 10 officers and employees with bonuses averaging over $500,000 per man last year.

Research conducted by the Center for Health Policy, Law and Management at the Terry Sanford Institute of Public Policy at Duke University shows a direct link between Blue’s soaring surpluses and the number of North Carolinians without health care.

The center determined that as many as 13,800 North Carolinians could be forced to go without health insurance, resulting in as many as 5 to 6 more avoidable deaths a year, because of the higher premium rates necessary to generate profit margins like the one Blue amassed last year.

The most recent census data already show that North Carolina leads the U.S. in the growth rate of uninsured, up from 14 percent of the state’s population in 2000-01 to 15.6 percent in 2001-02.

One possible and simple solution to this problem is a legislative proposal developed by the state Department of Insurance that would give state regulators additional powers to curb excessive profits by so-called “Article 65 corporations,” of which Blue is the chief example. Unfortunately, legislative leaders have informed supporters that the proposed bill will be “controversial” and unlikely to advance this summer.

Advocates worry that lawmakers’ reluctance to push the proposal this year is yet another sign that Blue is doing what it can preserve its conversion options.


Rob Schofield is policy director for the N.C. Justice Center in Raleigh.

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