October 12, 2011; Source: Detroit News | Back during the debates over national health insurance reform, it was proposed that nonprofit cooperatives could take the place of the public option. President Obama described the cooperatives as similar to the nonprofit Blue Cross Blue Shield associations we all know—though rarely love.
Republican Governor Rick Snyder of Michigan has suggested turning the state’s Blues into a for-profit as a way to increase health-insurance competition in the state. Some experts believe this would lower costs, lower rates, and increase access to high-quality health care. Covering 4.3 million people in Michigan and another 1 million through Michigan-based groups, Blue Cross Blue Shield of Michigan currently controls 70 percent of the state’s health insurance market, which probably annoys the 17 other health plans (covering 2.1 million people) that belong to the Michigan Association of Health Plans.
Unfortunately for the advocates of a for-profit Blue Cross Blue Shield, they’ve run into an obstacle in the form of the chairman of the Senate Insurance Committee. Senator Joe Hune, also a Republican, has come out against the conversion. He told the Gongwer News Service, “It’s important to take a look at the millions of citizens they insure and keep their best interests at heart…[and] I don’t think that selling Blue Cross to Wall Street does that.” (Interesting how all of a sudden “Wall Street” is the epithet of choice, regardless of political party…)
Sign up for our free newsletters
Subscribe to NPQ's newsletters to have our top stories delivered directly to your inbox.
The Blues don’t want to go for-profit either. In a succinct statement Andrew Hetzel, the vice president for corporate communications of Blue Cross Blue Shield, said, “Our board and management are committed to Blue Cross’s nonprofit status. A nonprofit, community-governed Blue Cross allows the company to do more to improve health-care quality and security for all the people of Michigan, rather than operate as a profit generator for stockholder owners.”
This story puts a couple of questions to the nonprofit sector: First, even though a conversion of a nonprofit insurer to a for-profit usually results in the creation of a charitable foundation—potentially though probably not one as good as the far-sighted California Endowment or California Wellness Foundation—is the tradeoff worth it? Does the creation of a foundation, even one as huge as the California Endowment, make up for what is lost in the conversion of a nonprofit insurer to a for-profit? And second, what is lost in the conversion to for-profit status? What is the important about a health-insurance provider being a nonprofit? What does it do that a for-profit doesn’t or wouldn’t?
And maybe there’s a third question: Assuming that national health insurance reform survives the attempts on the part of certain states to shrink or repeal the program, will a proposal to convert Blue Cross Blue Shield to a for-profit really have any effect? Or will the Affordable Care Act make nonprofit or for-profit status irrelevant?—Rick Cohen