GOVERNOR SIGNS HEALTH INSURANCE CONVERSION LAW
Signing Ceremony Highlights New Law Protecting Montana's Public Interest
Helena, Mont., April 8, 2005 - In a signing ceremony today, Governor Schweitzer signed SB 317 into law - the measure that governs how non-profit health insurance organizations like Blue Cross Blue Shield could go about converting to for-profit status. Those instrumental in the passage of the bill including State Auditor John Morrison, Attorney General Mike McGrath and Senator Greg Lind were present at the signing.
"When it comes to health insurance in Montana, consumers come first," said Morrison. "Some Blue Cross plans in other states have become for-profit companies. If our Blues ever move in that direction, there will now be an extensive public hearing process and the assets of the company will now be protected for the public."
The law has safeguards to make sure that if a conversion ever happens, it is done correctly, with ample protections for consumers. This is an important issue in a state where BCBS long benefited from tax advantages because of its nonprofit status.
Historically, Blue Cross and Blue Shield organizations nationwide, which insure nearly one in three Americans, operated as local, nonprofit organizations or mutual companies owned by policyholders. But a 1994 decision by the Blues association to allow for-profit organizations to hold Blue Cross Blue Shield licenses spurred a decade-long trend of for-profit conversions and mergers among the plans in many states.
"The first priority in a conversion process is to protect the public's interest by protecting public benefit charity assets," Morrison continued. "This new law states that if a nonprofit like BCBS converts to a for-profit company, a new private foundation - worth 100% of the company's fair market value at the time of conversion - will be created."