THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, August 28, 1996 TAG: 9608280416
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: 48 lines
A Virginia consumer advocacy group stepped up its criticism of the state's largest health insurer Tuesday, arguing that Trigon Blue Cross Blue Shield has broad public obligations in Virginia.
Trigon, which provides health insurance for 1.8 million residents in Virginia, has applied to state regulators to convert from a policyholder-owned company to one owned by private investors.
As a shareholder-owned company, Trigon would be under greater pressure to maximize its profits, which could compromise the quality and availability of its insurance coverage, said Jean Ann Fox, president of the Virginia Citizens Consumer Council.
That pressure could prompt Trigon to abandon its status as the health insurer of last resort for Virginia residents who cannot get coverage from other companies, said Fox, a frequent critic of Trigon's payment practices. In return for providing this coverage, Trigon has been granted a tax break by the state.
``Public concerns are not going to be on the record with the State Corporation Commission unless members of the public put them there,'' Fox said.
The conversion plan still must be approved by the State Corporation Commission and by more than two-thirds of Trigon's policyholders. An SCC public hearing on the plan is scheduled for Sept. 9 in Richmond. Policyholders are scheduled to vote Sept. 6.
In documents distributed to policyholders and filed with regulators, Trigon has said conversion to an investor-owned company is essential for its long-term survival. By having access to the capital markets and publicly traded shares, it will be able to expand by acquiring other health insurers, Trigon said.
As part of the conversion process, Trigon would distribute shares to its existing policyholders. The SCC must decide whether this plan is fair and equitable to the policyholders. As a nonprofit company, Trigon also holds assets in trust for the public, the consumer group said in its statement Tuesday.
``If its corporate status changes to a for-profit, it must continue to use the assets it earned as a nonprofit for charitable purposes,'' the group said.
Trigon already has agreed to turn over $175 million to the state to compensate for past tax breaks.
The consumer council also said Tuesday that it will promote its concerns about Trigon's conversion plan with a weeklong campaign of 60-second advertisements on radio stations throughout the state. by CNB