BlueCross BlueShield Looks to Make Profit

BCBSNC, the state's largest health insurer, submitted paperwork in January to convert from a nonprofit to a for-profit company.

The company made the announcement in December, saying the conversion would keep the group financially competitive.

"One of the things we face as a not-for-profit is that we're constrained financially," said Kyle Marshall, a spokesman for BCBSNC. "We can only raise capital through premiums."

Mollie Doll, spokeswoman for the N.C. Department of Insurance, is not so sure about the company's motives, but her department intends to hold BCBSNC to its promises.

"Lots of folks are weighing in on this issue," she said. "We've got a lot of obstacles to jump over before it goes through."

Marshall said as a for-profit company, BCBSNC will be able to respond more quickly to changes in the marketplace and better serve its customers.

He pointed out that health insurers in many other states, including California, Virginia and Indiana already have made the switch to for-profit companies.

"You may call it a national trend," he said.

BCBSNC's conversion will not be as quick or painless as in other states, however. In 1998, the N.C. General Assembly passed a law to ensure that any resultant for-profit company continues to serve the public interest. North Carolina is the only state that has passed such a law and it strictly governs every step of the conversion process.

Doll, whose department is partially overseeing the process, said the conversion is currently being held up because of problems in BCBSNC's business plan, outlined in the paperwork submitted in January.

"We are looking at affordability and accessibility issues," Doll said. "If they do become publicly traded, will they still be willing to cover small North Carolina towns that aren't as profitable as Charlotte, for instance?

"At the moment, we've got several areas where we're miles apart."

The North Carolina conversion law also creates an independent foundation to address North Carolina's healthcare needs. This foundation will own 100 percent of BCBSNC's stock upon conversion and could effectively manage the company.

The foundation will initially be created by the Attorney General's office of the N.C. Department of Justice. John Bason, information officer with the Attorney General's office, said thousands of letters were sent out to various state organizations seeking nominations for the 11 open seats on the new foundation's board.

"The letters went to health organizations, consumer advocacy organizations, Hispanic and African American organizations, state and county elected officials, all universities, the N.C. Citizens for Business and Industry, the mailing list of the N.C. Center for Nonprofits and so on," Bason said.

He said the Attorney General's office would like the board to be made up of people with expertise in healthcare, social welfare, asset management, non-profits and organizational development.

Marshall said BCBSNC intends to follow the state's conversion law "like a map."

He said, "Customers will not notice any difference in service or cost."

The City Editor can be reached at citydesk@unc.edu