Last April the state legislature signed off on a plan to allow Health Insurance Plan of Greater New York (HIP) and Group Health Inc. (GHI) to convert into a single for-profit company, EmblemHealth. HIP and GHI are New York City-based companies that together serve about a third of the city’s health care market, according to the Independent Budget Office of the City of New York, including government employees, union members, small business owners and Medicaid and Medicare recipients. That includes more than 500,000 city employees and retirees and 4 million people statewide.
It is now the responsibility of the superintendent of the New York State Insurance Department to make a final decision regarding the plan. More than 100 policy holders, advocates, union officials and others filled a public hearing last week at HIP headquarters on Water Street in lower Manhattan, while an overflow crowd in the lobby was turned away. Nearly all the speakers at the Jan. 29 hearing urged the superintendent to reject the plan. This was one of the last steps in a review process first announced in December, leading many to criticize what seems like a hurried timeline.
“Conversion to for-profit status is precisely the wrong direction to go,” Leonard Rodberg, research director for the NY Metro Chapter of Physicians for a National Health Program, said at the hearing.
A number of critics argued that by converting to for-profit status, EmblemHealth would be subject to the market pressures that would force them to hike premiums and scale back services for members. One fear of consumer advocates is that the conversion of HIP/GHI would continue a trend of market concentration in New York’s health care industry, reducing competition and raising prices accordingly. The city filed a lawsuit in 2006 to prevent the initial merger plans of HIP and GHI for this very reason. The lawsuit is still ongoing.
The conversion would not just be a technical change, added several speakers, but also a basic transformation of the company’s public service mission. “It will cause a fundamental and irrevocable shift in the allegiance and duties of the managements of HIP and GHI from the long-term health of the city’s employees, to shareholders, whose only concern is profit,” Deputy Mayor for Operations Edward Skyler said at the hearing.
Municipal government has a lot at stake regarding the conversion. About 93 percent of the city’s workforce is covered under HIP or GHI, for whom the city pays basic premiums at a cost of more than $4 billion every year, said Skyler. If premiums increase at the rate many predict, the city would be left footing a bill of up to $200 million more per year, according to city estimates.
Several local unions whose members rely on HIP or GHI coverage, including the Patrolmen's Benevolent Association, the United Federation of Teachers and the Office and Professional Employees Local 153, also have expressed concern about the plan and are monitoring the situation closely, said spokesmen for the groups.
For its part, EmblemHealth argued at the hearing that the conversion is a necessary step for it to remain a viable health care company. “We’re certain that the increasing dominance of large, national, for-profit companies requires that we convert from not-for-profit to for-profit corporate status,” chairman and CEO Anthony L. Watson said in his testimony.
