Conversion Primer | News Feature | Indy Week
Pin It

Conversion Primer 

North Carolina is the only state to have passed a law that sets down rules Blue Cross must follow in pursuing conversion to for-profit status. After a coalition of nonprofit and health leaders stopped an initial conversion bill that required no repayment of the public investment in Blue Cross, a study commission was formed and a new bill passed in 1998 that calls for 100 percent of the company's stock to be transferred to a charitable foundation when it converts.

1. The trigger: Blue Cross launched the conversion process by filing an application with the state Department of Insurance. By law, conversion is also triggered if the company merges with a for-profit; if it sells or transfers stock to an outside investor; if 10 percent or more of its assets are used to buy for-profit organizations (except for North Carolina health insurance businesses) or if more than 40 percent of its activities are for-profit.

2. The regulators: The state Commissioner of Insurance and the state Attorney General must approve Blue's conversion plan. The commissioner must decide whether the plan is in the public interest and protects the rights of consumers. The attorney general reviews the new foundation to ensure that 100 percent of the fair market value of the company is transferred to the charitable organization when Blue converts.

3. The carrot: The foundation is charged with promoting the health of North Carolinians. Its resources will come from selling its stock in the new for-profit Blue. The stock transfer will have no monetary value until the foundation sells its shares. The attorney general appoints an initial board to run the foundation from nominees chosen by an advisory committee of health care, business and nonprofit leaders. A voting rights agreement outlines the foundation's voting powers over its stock in the new company. A separate board runs the new for-profit Blue.

4. The public: The Insurance Commissioner must hold three public hearings within 60 days of Blue's filing a conversion plan. Written comments are collected for a period that can last up to 10 days after the public hearings.

5. Post conversion: After converting to a for-profit, Blue Cross would have the ability to raise capital on the stock market, issue stock options to its executives, buy other for-profits or be acquired by another for-profit. It would no longer be eligible for premium-tax discounts or tax breaks given to nonprofits. The new company would still be regulated by the state Department of Insurance.

For more information about Blue's conversion, visit the Department of Insurance at or Blue Cross at For information about conversions of Blue Cross plans in other states, visit Community Catalyst, or the National Consumers Union,

More by Barbara Solow


Subscribe to this thread:

Add a comment

INDY Week publishes all kinds of comments, but we don't publish everything.

  • Comments that are not contributing to the conversation will be removed.
  • Comments that include ad hominem attacks will also be removed.
  • Please do not copy and paste the full text of a press release.

Permitted HTML:
  • To create paragraphs in your comment, type <p> at the start of a paragraph and </p> at the end of each paragraph.
  • To create bold text, type <b>bolded text</b> (please note the closing tag, </b>).
  • To create italicized text, type <i>italicized text</i> (please note the closing tag, </i>).
  • Proper web addresses will automatically become links.

Latest in News Feature

Twitter Activity


Most Recent Comments

How do I get an absentee ballot?

by Carol Apperson on Vote, Dammit! The INDY’s 2017 Endorsements for the Raleigh, Durham, and Cary Municipal Elections (News Feature)

The Trump phenomenon is catastrophic. Obviously, Trump is far smarter than Hitler; but he has Hitler's ability to make the …

by Oscar Martinez on Welcome to the Resistance: Trump Is President, But Trumpism Can Never Prevail (News Feature)

Has anything been done to address the problems? When something is reported like this it's more important to check on …

by Christine Dale on The truth about the Goathouse Refuge (News Feature)

As one of the founders of Raleigh Cohousing I would like to set the record straight: The article is inaccurate …

by Kayelily Middleton on How the Triangle Became Ground Zero in the Cohousing Movement (News Feature)

© 2017 Indy Week • 320 E. Chapel Hill St., Suite 200, Durham, NC 27701 • phone 919-286-1972 • fax 919-286-4274
RSS Feeds | Powered by Foundation