Blue Cross Foundation Proposal Wins Support : Health care: The $2 billion will compensate the public for change to for-profit from nonprofit.

With more than $2 billion worth of charitable health care funding at stake, numerous community groups and health care organizations gathered Friday to tell state regulators that they largely support a new foundation proposed by Blue Cross of California to distribute millions to health care programs for the needy.

Woodland Hills-based Blue Cross announced the proposal in September at the urging of Department of Corporations Commissioner Gary Mendoza in order to compensate the public for Blue Cross having changed most of its business from a nonprofit organization to a for-profit one. State law requires nonprofit health insurers to donate to charity the value of any assets converted into for-profit businesses in exchange for the tax breaks previously granted.

Friday’s meeting was designed to gather public opinion on the proposal, Mendoza said, before the department approves the specifics of how the proposed California Health Care Foundation will be structured.

Breast cancer survivor Elizabeth “Betsy” Mullen urged the department to quickly approve the proposal for the foundation. Money from the foundation is needed to support breast cancer treatment programs for women who cannot afford to pay their medical bills, she said.

“We cannot afford to tie up the treatment dollars any more,” Mullen said. “Put politics and special interests aside, and get this money to people who need it.”

Richard Williams, president and chief executive of Childrens Hospital of Los Angeles, said a $1-million contribution from Blue Cross last year helped keep the hospital’s general pediatric clinic open longer hours to relieve crowding of its emergency rooms. The clinic needs continued contributions from the foundation to provide better service to about 200,000 children the hospital treats every year, he added.

The foundation, according to Blue Cross Senior Vice President Pat Garner, would receive more than $2 billion from Blue Cross assets to establish itself as the fifth-largest charitable foundation in the country. The establishment of the foundation was triggered when Blue Cross’ created the for-profit Wellpoint Health Network, Inc. to operate most of its health care insurance programs.

Some critics of the plan urged the panel to provide safeguards to ensure that the foundation does not funnel contributions to Wellpoint and that the board of directors include more members of minority groups. Blue Cross said the board’s membership is already one-third minority, including blacks, Asians and Latinos.

While supporters of the Blue Cross plan urged quick state approval in order that the foundation might begin granting funds to needy health care programs, Mendoza declined to indicate when he would make a decision.

“Our most important priority is getting it right,” he said.