THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, February 2, 1996 TAG: 9602020444
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY DAVID M. POOLE, STAFF WRITER
DATELINE: RICHMOND LENGTH: Medium: 78 lines
Trigon Blue Cross Blue Shield on Thursday dropped the names of its 200,000 health insurance subscribers into its lobbying effort before the General Assembly.
These subscribers - companies, government agencies and some individuals - would receive shares of Trigon stock under the insurance giant's plan to become a for-profit company.
Trigon indexed the 2-foot-thick subscriber list by legislative district to impress upon lawmakers just how many constituents stand to profit.
The message from Trigon lobbyists was that these same constituents would lose if consumer groups have their way in amending the company's plan.
``Everybody who wants to chip off a piece of the Trigon pie . . . (is) taking it out of the policyholders' shares,'' said Brooke C. Taylor, a Trigon spokesperson. ``You're taking it out of the (shares of) senior citizens, the farmers or school districts.''
A consumer advocate battling Trigon conceded that the subscriber list was a masterstroke lobbying tactic, but one that she said masks the real issues at stake.
Jean Ann Fox, executive director of the Virginia Citizens Consumer Council, said that legislation introduced on Trigon's behalf would pre-empt the State Corporation Commission, which has scheduled hearings on the insurer's for-profit conversion in May.
``I have never seen such an egregious piece of special interest legislation in all my days,'' Fox said.
``This is perhaps the most important case ever to go before the SCC. We think the General Assembly should leave the decision to the commission.''
Consumer groups are concerned the bill would bar the SCC from raising the value of a foundation, which Trigon would establish to repay the public for years of tax exemptions. These tax breaks helped the company cover 1.8 million Virginians and gain a 30 percent market share.
Trigon has agreed to put $159 million worth of stock into the foundation, but Fox and other consumer advocates want Trigon to donate the company's full value, estimated between $1 billion and $1.75 billion.
The Trigon bills will get their first hearing Monday before a House Appropriations subcommittee and the full Senate Commerce and Labor Committee.
Trigon officials say the stock offer to subscribers is one of the most overlooked aspects of the company's plan. Each subscriber will get shares based on longevity, types of coverage and myriad other factors, Taylor said.
Preliminary estimates released Thursday show that two-thirds of the shares would go to companies, government agencies and organizations with group health plans. The stock would go to the employer, not to employees covered under the plans.
The remaining one-third of shares would go to 184,383 individual policyholders that include those insured through the Farm Bureau, seniors with Medicare supplements and others under 65.
``We're giving them something for free,'' Taylor said.
Fox argued that the policyholders deserve no windfall. ``They bought the service and they got the service they bought.''
The public, she said, deserves the windfall in the form of a foundation for unmet health needs because for 50 years the public footed the bill for Trigon's tax breaks, which helped make the company the state's most formidable health insurer.
Trigon pressed the policyholder issue with documents showing how many shares of stock would flow to local governments, schools and even churches across the state.
Securities laws bar Trigon officials from discussing the potential value of the shares. The office of Attorney General James S. Gilmore III has quoted Trigon documents that put the total value of the company at $1 billion to $1.75 billion.
Company officials say that becoming a stock company will enable the insurer to survive and grow in the rapidly consolidating health care industry. The company plans to expand its market into Southeastern states through acquisitions and networks with large employers.
KEYWORDS: DEREGULATION GENERAL ASSEMBLY TRIGON by CNB