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Mr. Wilson, of the Rosenberg Foundation, expects the new cha

April 4, 1995

Mr. Wilson, of the Rosenberg Foundation, expects the new charities to focus at least initially on developing and testing health policies rather than developing so-called safety-net programs for the indigent or needy. He cites as an example the California Wellness Foundation, which was created when a nonprofit predecessor to Health Systems converted in 1992. That foundation’s programs emphasize the promotion of healthy behavior that can reduce spending for medical care. It’s the difference between spending money to encourage healthful behavior, he says, and spending on medical care itself.

Depending on their tax status and other arcane issues, the two foundations planned in California are expected to give away roughly $150 million each year, a huge sum by any measure. In September, after months of research, Blue Cross submitted to the state a weighty document outlining its spending plans. It drew praise from some charity experts, but also was criticized by some consumer groups.

For one thing, the California conversion and the others being considered indicate a trend-setting shift in Blue Cross plans’ philosophy. As nonprofits, they carry certain public-policy obligations _ to provide low-cost insurance for the poor, for instance. As they convert to for-profit operations, the theory goes, the charities they fund soothe the public’s loss of the public-policy benefits. But some consumer advocates worry that the two California foundations will be geared toward bolstering the HMO industry rather than filling holes in the state’s safety net for poor and uninsured people, or that certain charity programs will be self-serving, in the sense that they will benefit WellPoint _ in which one of the foundations will hold a significant stake.

One Blue Cross program that has become a lightning rod for criticism, California Kids, provides free primary and preventive health services to uninsured children of the working poor. Blue Cross pays WellPoint $400 a year to provide care to each covered child. WellPoint ``isn’t losing money on the project,″ notes Jeanne Finberg, a senior attorney at Consumers Union, publisher of Consumer Reports magazine.

Blue Cross responds that ``nobody is making money on the program,″ adding that other HMOs will be invited to participate when the California Kids program expands this year.

Ms. Finberg adds that the solution to such concerns is to appoint truly independent directors to the charity’s boards. Blue Cross has proposed two separate, independent boards that wouldn’t have any overlapping membership with the new HMO, though they may include members from the current Blue Cross board.

Consumer groups worry that the foundation may thus be influenced by its past ties to WellPoint _ a claim Blue Cross vigorously disputes. Says Patrick Garner, a Blue Cross senior vice president: ``The idea that board members would carry those old school ties with them and grant projects that benefit WellPoint is ridiculous.″

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