Stewardship of public assets under nonprofit conversion models: New York's Empire Blue Cross Blue Shield case study

Abstract

This research describes a case study of the Empire Blue Cross Blue Shield conversion under way in New York. In January 2002, legislation approved the conversion and the disposition of $1 billion in assets: 95 percent for health care salaries and expenses and 5 percent for a foundation to promote health care for the poor. New York's approach is controversial. According to Greene and Sommerfield (2002), the New York Times considers it the largest fiscal gimmick in New York's history, and Consumers Union is challenging it in the courts, asserting the plan is illegal. This article describes New York's approach to nonprofit conversion, proposing that more research on conversions is needed and that case study research illustrating the way different states approach the issue has the potential to bring together researchers, practitioners, and policymakers in an important debate that will advance public policymaking that furthers the public good. Subsequently, on June 20, 2005, New York State's highest court dismissed the Consumers Union lawsuit, affirming the actions of the New York State legislature and bringing to an end nearly three years of state-level litigation.