Managed Care - August 2008 - (Page 18) Are state governments raiding the till? any conversion foundations remain mired in controversy from bitter debates over how much funding should be directed to the foundation from the plan, how foundation funds should be spent, and even wrangling over who owns foundation assets. In at least three states, governors and legislators have made the case that since not-for-profit health plans received years of tax exemptions, the money for the foundation that spawned them belongs to the public — and the public is the government. Government efforts to siphon funding from foundations have been doggedly challenged with varying success by Community Catalyst and Consumers Union, which produces Consumer Reports. One incident considered most egregious by the groups occurred in 2002. George Pataki, running for a third term as governor of New York, pushed legislative approval through for Empire Blue Cross & Blue Shield to become a for-profit company if 95 percent of its assets, about $1 billion, were donated for unionized state health worker salary increases. Despite numerous protestations and a lawsuit by Consumers Union and others, the governor’s plan succeeded after the state Court of Appeals ruled that New York had the constitutional authority to take Empire’s charitable proceeds, provided they were spent by the state for health purposes. The foundation created by the Empire conversion received a mere 5 percent of Empire’s assets — $50 million. “New York’s Billion Dollar Blue Cross Heist” is the way the Chronicle of Philanthropy, the industry trade journal, portrayed it. Another instance was when M Trigon Blue Cross Blue Shield of Virginia changed to for-profit status in 1996. The state legislature wrested control of $175 million of its assets for its general operating budget that fiscal year, without the requirement that it form a foundation. A small amount of stock went to policyholders. When Blue Cross & Blue Shield of Wisconsin sold to the for-profit Cobalt Corp. in 2000, it formed the Wisconsin United for Health Foundation. However, all the foundation’s $600 million in assets were immediately diverted to two beneficiaries: the Medical College of Wisconsin and the University of Wisconsin Medical School. Community Catalyst and Consumers Union challenged the move but was not successful. Missouri is one of the more contentious states. Late last year, Missouri Gov. Matt Blunt began publicly pressuring the $1.2 billion Missouri Foundation for Health to turn over $51 million of its assets annually to pay for underfunded state programs such as childhood obesity, tobacco cessation, and mental health. The governor claims that the foundation funds are taxpayer assets. Foundation director James Kimmey, MD, refused, saying foundation money should not be used to compensate for government shortfalls. Local newspaper editorials supported the foundation. Twice before, Republicans in the Missouri legislature introduced bills that would put control of the foundation under the governor. Those efforts failed. Blunt also claims the foundation violated state law, which prohibits the use of public money for abortions. The foundation gave more than $1 million to Planned Parenthood and NARAL, the National As- sociation for the Repeal of Abortion Laws. “Those funds were used for reproductive health, not abortion,” says foundation spokeswoman Bev Pfeifer Harms. Oddly, the Missouri foundation has sometimes stepped up when government support has been lacking. Its largest grant, $13 million, went in November to 85 county health departments for computers, medical equipment, refrigerators, exam tables, and cars. It also granted $11 million for the Missouri Family Health Council and the Missouri Primary Care Association to purchase the human papilloma virus vaccine for young women who did not have private insurance or Medicaid to pay for it. The foundation was created in 2000 when Blue Cross Blue Shield of Missouri became for-profit RightChoice Managed Care. Health plan conversion foundations are not alone in vulnerability to political pressure. In 2006, two Michigan state legislators reportedly decided that when Edsel Ford started in 1936 what became one of the largest U.S. foundations, the Ford Foundation, his benevolence was an exclusive gift to the people of Michigan. But Ford foundation grants now cover the world, with only a small portion going to Michigan charities. Michigan lawmakers introduced a bill that would direct state courts to determine the intent of charitable donors. The state attorney general offered to end a probe into the foundation’s grant making, spurred by the proposed legislation, if the foundation agreed to make 20 percent of its grants to Michigan charities. This was called a “political shake down” in a New York Times op-ed article written by John J. Miller, National Review’s national political reporter. 18 MANAGED CARE / AUGUST 2008
For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.