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Public Policy Empire Blue Cross Blue Shield Conversion New York State still cannot spend any of the $418 million it received from Empire Blue Cross and Blue Shield’s conversion to a public company in 2002. The NYS Supreme Court has ruled that Consumers Union has raised a viable challenge to the constitutionality of legislation that allowed Empire’s holding company, WellChoice, to proceed with an initial public offering last November. The main goal of the suit is to invalidate the 2002 law allowing Empire to convert. That legislation approved the public offering and said 95 percent of the money raised from it would be given to the state to pay for salary increases for health care workers. The remaining money would be set aside in a charitable foundation to improve health care for uninsured New Yorkers. Consumers Union has challenged the deal arguing that all the money should have been given to the charitable foundation since Empire was founded with grant money and has benefited from tax breaks. The office of Attorney General Eliot L. Spitzer represents the state in the suit. In the meantime, several bills have been introduced by state legislators that could ameliorate the effects of the 2002 law. One bill would set standards for conversions and require the transfer of 100% of fair market value to a foundation. Sen. Seward has a similar bill that requires transfer to a foundation but is somewhat less specific. Another introduced by Assemblyman Grannis, would require that 50% of the proceeds exceeding $1 billion in the Empire conversion be paid to a conversion foundation. That could be up to $900 million at Empire’s present stock value, a very substantial enhancement to the original 5% endowment. |
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The Funders
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of Upstate New York is a pilot project of |