ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, February 2, 1996 TAG: 9602020038
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
DATELINE: RICHMOND
SOURCE: DAVID M. POOLE STAFF WRITER
The 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 those 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 Taylor, a Trigon spokeswoman. "You're taking it out of the [shares of] senior citizens, the farmers or school districts."
A consumer advocate battling Trigon conceded the subscriber list was a masterful lobbying tactic, but said it masks the real issues.
Jean Ann Fox, executive director of the Virginia Citizens Consumer Council, said 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 that 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 much more.
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 a number of 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. Those tax breaks 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 around the state. Taylor said Trigon would make the documents available to interested lawmakers.
Securities laws bar Trigon officials from discussing the potential value of the shares. Attorney General Jim Gilmore's office has quoted Trigon documents that put the total value of the company at between $1 billion and $1.75 billion.
Company officials say becoming a stock company will enable Trigon 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.
TRIGON: THE LATEST PROPOSAL
Trigon Blue Cross Blue Shield is proposing that its 200,000 health insurance subscribers would receive shares of its stock.
WHY YOU SHOULD CARE
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.
The remaining one-third of shares would go to 184,383 individual policy holders that include those insured through the Farm Bureau, seniors with Medicare supplements and others under 65.
WHAT'S GOING ON
The non-profit mutual insurance company Trigon, the state's largest insurer, wants to convert to a for-profit stock company.
The State Corporation Commission must OK the switch.
Trigon benefited from tax breaks over the years and has agreed to put $159 million worth of stock in trust: $95 million is in the governor's proposed budget.
A bill pending before the General Assembly would set the trust amount firmly at $159 million.
Consumer groups don't like that idea because it would ban the SCC from raising the value of a foundation.
The Trigon bills get their first hearing Monday before a House Appropriations subcommittee and the full Senate Commerce and Labor Committee.
OPPOSING VIEWS
"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 advocate Jean Ann Fox
"Everybody who wants to chip off a piece of the Trigon pie ... [is] taking it out of the policy holders' shares. You're taking it out of the [shares of] senior citizens, the farmers or school districts."
- Trigon spokeswoman Brooke Taylor
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