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Blue Cross Bill: Corporate Influence over Legislature


  Editor's note: Blue Cross is a nonprofit, tax-exempt health insurance corporation begun more than 50 years ago. Now directors want Blue Cross to be a for-profit corporation. The company amassed hundreds of millions of dollars during its tax-exempt days, and now its directors want to take that pile of taxpayers' assets and convert it to corporate assets. Recent media and political strategies have with increasing success argued that this money, because it was gathered by a charitable corporation, should be turned over to a charitable fund when Blue Cross goes for-profit. Here's a great review of how BC/BS almost got what it wanted.  

The Blue Cross legislation is the best example in a long time of how the legislative process works and who really holds the power in state government. It could be a case study in corporate influence and lobbying pressure. Here are a few of the facts of the case study.

Blue Cross' senior vice-president is Brad Wilson, former legal counsel and lobbyist for Governor Jim Hunt. Another Blue Cross lobbyist is Brad Adcock. Both Wilson and Adcock were recently elected by legislators to the Board of Governors of the UNC System. Wilson, in his former job with the Governor, was paid by the taxpayers to influence legislators on behalf of the Hunt Administration. After a breezy trip through the revolving door of government and lobbying, he came out the other side working for Blue Cross to help the company keep taxpayers' money.

Blue Cross' public relations person is Lynn Garrison, the former p.r. specialist for Hunt's Department of Human Resources.

One of Blue Cross' largest customers is the state of NC, as the company is a provider for the state employees' health plan.

Blue Cross makes large campaign contributions to the Governor and to key legislators. Contributions to legislative candidates don't generally appear in thousand dollar increments. The company's political action committee gave several key legislators more than $2,000, including $3,500 to House Speaker Harold Brubaker, $2,500 to Rules Chairman Richard Morgan and $2,000 to bill sponsor Sen. Tony Rand. The company also gave $8,000 to Gov. Hunt.

The bill appeared out of nowhere with powerful sponsors and was rushed through legislative channels until consumer advocates discovered the move in the House. The Senate never even saw the Blue Cross provisions and only the House Rules Committee saw it in the House. House Rules Chairman Richard Morgan celebrated the occasion by having dinner with Wilson and other Blue Cross lobbyists at a downtown Raleigh restaurant.

Whatever the fate of the Blue Cross legislation, it started out as a move engineered by political insiders to help the corporation make millions of dollars and keep millions earned by exemptions from taxes granted as a result of Blue Cross' nonprofit status.

It evolved into an episode that illustrates a rarely discussed secret in the halls of power at the legislative building and the Governor's Mansion. Democrats and Republicans fight heatedly over important legislation about abortion, crime, and welfare. It is easy to predict the sides on those issues -liberal and moderate Democrats versus conservative and far-right-wing Republicans. The corporations stay out of those battles.

But take an issue as central to the large corporate agenda as the Blue Cross profit grab, with hundreds of millions of dollars at stake, and partisanship falls aside: the battle is then between the legislators with ties to the corporate sector and those without.

The House debate on Blue Cross was waged on those terms, and for a brief moment there was populist revolt on the House floor. Progressive legislators such as Rep. Paul Luebke and Rep. John Gamble joined forces with conservatives such as Rep. Charlotte Gardner, Rep. Cary Allred, and Rep. Julia Howard to speak out against corporate welfare and for protection of working people against the massive corporate power and its influence in government.

On the other side were Democrats and Republicans who are inside players, corporate lawyers and defenders of the system. They included notably progressive Democrats such as Rep. Bob Hensley and Phil Baddour, and Republican leaders with political ambitions, such as House Majority Leader Leo Daughtry.

The Blue Cross debate fully engaged the corporate giants in an open defense of their control of the system that usually happens in more subtle ways. This time there was too much money at stake to stay behind the scenes. Whatever its outcome, the Blue Cross legislation should at least remind us of how far we have to go to empower the people who don't sit on Boards of Directors or make huge campaign contributions.

  From the weekly Left Legislative Update, courtesy of the Common Sense Foundation. For information on the LLU or the Foundation, call 821-9270.  

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