Map of life expectancy at birth from Global Education Project.

Tuesday, October 27, 2009

Business News

A commenter asks who does own these Blue Cross/Blue Shield insurance companies? Originally, they were all non-profit, but a movement began in the '90s to convert them to for-profit corporations. As Jamie Robinson recounts here, being not-for-profit did not necessarily mean that they operated principally in the public interest. Cozy relationships with hospitals and specialists, limited or no competition, and indulgent regulation all meant that they weren't necessarily working for you.

However, for-profit insurers have investors who inevitably are going to come first, so it's not even an issue. The largest insurer in the U.S., WellPoint, owns the Blue Cross/Blue Shield brand in Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, Ohio, Virginia, Wisconsin, George, New York and California. It is a public corporation. You can buy stock -- it's going for about $45 a share right now, and the share price is prominently displayed at the top of their web site, next to a tab leading to investor info. Some other states' plans are private corporations, but I don't have easy access to a list of which are private for-profit and which remain non-profit.

There were a lot of issues in these conversions about what should happen to the "social assets" embodied in the not-for-profit corporation. In California the conversion was accompanied by a big contribution -- about $6 billion IIRC -- to a foundation called the California Endowment which basically funds projects aimed at health equity. That sounds good, but $6 billion doesn't go far at all in California; as is obvious right now, the good offices of the California Endowment are a fart in a whirlwind compared to the unmet health care needs of Californians.

The main issue, as far as I'm concerned, is that this created a powerful vested interest, with very deep pockets to spend on lobbying and lying to the public in advertisements, which is standing in the way of reform in a way that non-profit corporations would have been much less motivated to do. That was the biggest mistake.

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