:: Who Owns Blue Cross? Who Should?

The Empire conversion raises again in poignant form the question of who really owns a nonprofit organization, which nominally belongs to everyone and really belongs to no one. Each of the many stakeholders in the Empire debate—including the firm itself, state government, the hospital industry, the labor union, and the dozens of community and patients’ organizations—could argue that historical precedent and contemporary need gave it claims to whatever monies flowed from the sale of the new corporation’s equity toWall Street.

James C. Robinson, Health Affairs (2003), “The Curious Conversion of Empire Blue Cross

The delightfully insightful and well-written scholarly piece by James Robinson is a classic in the policy debate over the changing role of the Blue Cross organizations in the healthcare system. The article depicts in readily comprehensible fashion the complex symbiosis between public and private mission of the Blues and, in particular, its progressive estrangement from the medical provider organizations so instrumental in its birth.

Now the issue arises once again in high drama as Horizon Blue Cross Blue Shield of New Jersey seeks to convert from a not-for-profit health service corporation to a for-profit health insurer. With over $1 billion in the balance “for the purposes of improving New Jersey’s health care system”, the stakes are bound to draw political interest.

Though the Blues organizations began in the Depression era as essentially as a revenue stabilization mechanism for nonprofit hospitals and medical providers, the long history since has many twists and turns. The Horizon controversy demonstrates the divergence of interests as the New Jersey Hospital Association raises questions about the proposed conversion.

Who owns Blue Cross? In the case of the New York conversion to for profit status (the Empire story), Robinson observed that

The outcome of the Empire conversion suggests that ownership rights ultimately reside with the politicians who create the rules and, indirectly, with the organized political constituencies that elect (and can replace) those politicians.

Turning to the present controversy over Horizon, note that the NJHA does not oppose the conversion . . . not yet anyway. Rather, it questions where the $1 billion is going and what the network structure would look like afterwards. If Horizon answers those questions satisfactorily, then the conversion will likely move forward without a hitch.  Robinson’s observations hold equally well, it seems, in the the case of the Horizon conversion.
In the end, the public will be better served once shareholders have control of the Blues and the ownership question is no longer decided through political machinations. The conversion won’t end the politics, but the transparency gained thereby will far surpass the present confusion of economic interests.