Universal health care

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Universal_health_care 

Universal health care by country (2010)

Universal health care (also called universal health coverage, universal coverage, or universal care) is a health care system in which all residents of a particular country or region are assured access to health care. It is generally organized around providing either all residents or only those who cannot afford on their own, with either health services or the means to acquire them, with the end goal of improving health outcomes.

Some universal healthcare systems are government-funded, while others are based on a requirement that all citizens purchase private health insurance. Universal healthcare can be determined by three critical dimensions: who is covered, what services are covered, and how much of the cost is covered. It is described by the World Health Organization as a situation where citizens can access health services without incurring financial hardship. Then-Director General of the WHO Margaret Chan described universal health coverage as the "single most powerful concept that public health has to offer" since it unifies "services and delivers them in a comprehensive and integrated way". One of the goals with universal healthcare is to create a system of protection which provides equality of opportunity for people to enjoy the highest possible level of health. Critics say that universal healthcare leads to longer wait times and worse quality healthcare.

As part of Sustainable Development Goals, United Nations member states have agreed to work toward worldwide universal health coverage by 2030. Therefore, the inclusion of the universal health coverage (UHC) within the SDGs targets can be related to the reiterated endorsements operated by the WHO.

History

See also: List of countries with universal health care

Note: Links in table are "Healthcare in COUNTRY".

Universal health care start date

Country	Year
Algeria	1975
Armenia	2023
Australia	1975
Austria	1967
Bahrain	1957
Belgium	1945
Bhutan	1970
Brazil	1988
Brunei	1958
Canada	1966
China	2009
Cyprus	1980
Denmark	1973
Finland	1972
France	1974
Germany	1941
Greece	1983
Hong Kong	1993
Iceland	1990
Indonesia	2014
Ireland	1977
Israel	1995
Italy	1978
Japan	1961
Kuwait	1950
Luxembourg	1973
Malaysia	1980s
Netherlands	1966
New Zealand	1938
Norway	1956
Portugal	1979
Russia	1918
Saudi Arabia	2019
Singapore	1993
Slovenia	1972
South Korea	1988
Spain	1986
Sweden	1955
Switzerland	1994
Taiwan	1995
Turkey	2003
United Arab Emirates	1971
United Kingdom	1948

The first move towards a national health insurance system was launched in Germany in 1883, with the Sickness Insurance Law. Industrial employers were mandated to provide injury and illness insurance for their low-wage workers, and the system was funded and administered by employees and employers through "sick funds", which were drawn from deductions in workers' wages and from employers' contributions. This social health insurance model, named the Bismarck Model after Prussian Chancellor Otto von Bismarck, was the first form of universal care in modern times.

Other countries soon began to follow suit. In the United Kingdom, the National Insurance Act 1911 provided coverage for primary care (but not specialist or hospital care) for wage earners, covering about one-third of the population. The Russian Empire established a similar system in 1912, and other industrialized countries began following suit. By the 1930s, similar systems existed in virtually all of Western and Central Europe. Japan introduced an employee health insurance law in 1927, expanding further upon it in 1935 and 1940.

Following the Russian Revolution of 1917, the Bolsheviks established the world's first fully free and universal health care system in Soviet Russia in July 1918. The system was highly centralized, and while nominally any person regardless of his status was covered, the actual coverage, especially in the more remote and impoverished areas was virtually non-existent.

In New Zealand, a universal health care system was created in a series of steps, from 1938 to 1941. In Australia, the state of Queensland introduced a free public hospital system in 1946.

Following World War II, universal health care systems began to be set up around the world. On July 5, 1948, the United Kingdom launched its universal National Health Service. Universal health care was next introduced in the Nordic countries of Sweden (1955), Iceland (1956), Norway (1956), Denmark (1961) and Finland (1964). Universal health insurance was introduced in Japan in 1961, and in Canada through stages, starting with the province of Saskatchewan in 1962, followed by the rest of Canada from 1968 to 1972. A public healthcare system was introduced in Egypt following the Egyptian revolution of 1952. Centralized public healthcare systems were set up in the Eastern bloc countries. The Soviet Union extended universal health care to its rural residents in 1969. Kuwait and Bahrain introduced their universal healthcare systems in 1950 and 1957 respectively (prior to independence). Italy introduced its Servizio Sanitario Nazionale (National Health Service) in 1978. Universal health insurance was implemented in Australia in 1975 with the Medibank, which led to universal coverage under the current Medicare system from 1984.

From the 1970s to the 2000s, Western European countries began introducing universal coverage, most of them building upon previous health insurance programs to cover the whole population. For example, France built upon its 1928 national health insurance system, with subsequent legislation covering a larger and larger percentage of the population, until the remaining 1% of the population that was uninsured received coverage in 2000. Single payer healthcare systems were introduced in Finland (1972), Portugal (1979), Cyprus (1980), Spain (1986) and Iceland (1990). Switzerland introduced a universal healthcare system based on an insurance mandate in 1994. In addition, universal health coverage was introduced in some Asian countries, including Malaysia (1980s), South Korea (1989), Taiwan (1995), Singapore (1993), Israel (1995) and Thailand (2001).

Following the collapse of the Soviet Union, Russia retained and reformed its universal health care system, as did other now-independent former Soviet republics and Eastern bloc countries.

Beyond the 1990s, many countries in Latin America, the Caribbean, Africa and the Asia-Pacific region, including developing countries, took steps to bring their populations under universal health coverage, including China and Brazil's SUS which improved coverage up to 80% of the population. Taiwan implemented its system in 1995. India introduced a tax-payer funded decentralised universal healthcare system as well as comprehensive public and private health insurances that helped reduce mortality rates drastically and improved healthcare infrastructure across the country dramatically. A 2012 study examined progress being made by these countries, focusing on nine in particular: Ghana, Rwanda, Nigeria, Mali, Kenya, Indonesia, the Philippines and Vietnam.

Currently, most industrialized countries and many developing countries operate some form of publicly funded health care with universal coverage as the goal. According to the National Academy of Medicine and others, the United States is the only wealthy, industrialized nation that does not provide universal health care. The only forms of government-provided healthcare available are Medicare (for elderly patients above age 65 as well as people with disabilities), Medicaid (for low-income people), the Children's Health Insurance Program (for children in families of modest income, but too high to qualify for Medicaid), the Military Health System (active, reserve, and retired military personnel and dependants), and the Indian Health Service (members of federally recognized Native American tribes).

Funding models

See also: Health care economics

Health spending by country. Percent of GDP (Gross domestic product). For example: 11.2% for Canada in 2022. 16.6% for the United States in 2022.

Total healthcare cost per person. Public and private spending. US dollars PPP. For example: $6,319 for Canada in 2022. $12,555 for the US in 2022.

Universal health care in most countries has been achieved by a mixed model of funding. General taxation revenue is the primary source of funding, but in many countries it is supplemented by specific charge (which may be charged to the individual or an employer) or with the option of private payments (by direct or optional insurance) for services beyond those covered by the public system. Almost all European systems are financed through a mix of public and private contributions. Most universal health care systems are funded primarily by tax revenue (as in Portugal, India, Spain, Denmark and Sweden). Some nations, such as Germany, France, and Japan, employ a multi-payer system in which health care is funded by private and public contributions. However, much of the non-government funding comes from contributions from employers and employees to regulated non-profit sickness funds. Contributions are compulsory and defined according to law. A distinction is also made between municipal and national healthcare funding. For example, one model is that the bulk of the healthcare is funded by the municipality, specialty healthcare is provided and possibly funded by a larger entity, such as a municipal co-operation board or the state, and medications are paid for by a state agency. Universal health care financing can range from premiums to fees which increase with income. Universal health care systems can have redistributive effects.

Compulsory insurance

Main article: National health insurance

This is usually enforced via legislation requiring residents to purchase insurance, but sometimes the government provides the insurance. Sometimes there may be a choice of multiple public and private funds providing a standard service (as in Germany) or sometimes just a single public fund. Healthcare in Switzerland is based on compulsory insurance.

In some European countries where private insurance and universal health care coexist, such as Germany, Belgium and the Netherlands, the problem of adverse selection is overcome by using a risk compensation pool to equalize, as far as possible, the risks between funds. Thus, a fund with a predominantly healthy, younger population has to pay into a compensation pool and a fund with an older and predominantly less healthy population would receive funds from the pool. In this way, sickness funds compete on price and there is no advantage in eliminating people with higher risks because they are compensated for by means of risk-adjusted capitation payments. Funds are not allowed to pick and choose their policyholders or deny coverage, but they compete mainly on price and service. In some countries, the basic coverage level is set by the government and cannot be modified.

The Republic of Ireland at one time had a "community rating" system by VHI, effectively a single-payer or common risk pool. The government later opened VHI to competition, but without a compensation pool. That resulted in foreign insurance companies entering the Irish market and offering much less expensive health insurance to relatively healthy segments of the market, which then made higher profits at VHI's expense. The government later reintroduced community rating by a pooling arrangement and at least one main major insurance company, Bupa, withdrew from the Irish market.

In Poland, people are obliged to pay a percentage of the average monthly wage to the state, even if they are covered by private insurance. People working under a employment contract pay a percentage of their wage, while entrepreneurs pay a fixed rate, based on the average national wage. Unemployed people are insured by the labor office.

Among the potential solutions posited by economists are single-payer systems as well as other methods of ensuring that health insurance is universal, such as by requiring all citizens to purchase insurance or by limiting the ability of insurance companies to deny insurance to individuals or vary price between individuals.

Single-payer

Main article: Single-payer healthcare

Single-payer health care is a system in which the government, rather than private insurers, pays for all health care costs. Single-payer systems may contract for healthcare services from private organizations, or own and employ healthcare resources and personnel (as was the case in England before the introduction of the Health and Social Care Act). In some instances, such as Italy and Spain, both these realities may exist at the same time. "Single-payer" thus describes only the funding mechanism and refers to health care financed by a single public body from a single fund and does not specify the type of delivery or for whom doctors work. Although the fund holder is usually the state, some forms of single-payer use a mixed public-private system.

Tax-based financing

In tax-based financing, individuals contribute to the provision of health services through various taxes. These are typically pooled across the whole population unless local governments raise and retain tax revenues. Some countries (notably Spain, the United Kingdom, Ireland, New Zealand, Italy, Brazil, Portugal, India and the Nordic countries) choose to fund public health care directly from taxation alone. Other countries with insurance-based systems effectively meet the cost of insuring those unable to insure themselves via social security arrangements funded from taxation, either by directly paying their medical bills or by paying for insurance premiums for those affected.

Social health insurance

Main article: Bismarck Model

In a social health insurance system, contributions from workers, the self-employed, enterprises and governments are pooled into single or multiple funds on a compulsory basis. This is based on risk pooling. The social health insurance model is also referred to as the Bismarck Model, after German Chancellor Otto von Bismarck, who introduced the first universal health care system in Germany in the 19th century. The funds typically contract with a mix of public and private providers for the provision of a specified benefit package. Preventive and public health care may be provided by these funds or responsibility kept solely by the Ministry of Health. Within social health insurance, a number of functions may be executed by parastatal or non-governmental sickness funds, or in a few cases, by private health insurance companies. Social health insurance is used in a number of Western European countries and increasingly in Eastern Europe as well as in Israel and Japan.

Private insurance

See also: Health insurance marketplace

In private health insurance, premiums are paid directly from employers, associations, individuals and families to insurance companies, which pool risks across their membership base. Private insurance includes policies sold by commercial for-profit firms, non-profit companies and community health insurers. Generally, private insurance is voluntary in contrast to social insurance programs, which tend to be compulsory.

In some countries with universal coverage, private insurance often excludes certain health conditions that are expensive and the state health care system can provide coverage. For example, in the United Kingdom, one of the largest private health care providers is Bupa, which has a long list of general exclusions even in its highest coverage policy, most of which are routinely provided by the National Health Service. In the Netherlands, which has regulated competition for its main insurance system (but is subject to a budget cap), insurers must cover a basic package for all enrollees, but may choose which additional services they offer in supplementary plans; which most people possess.

The Planning Commission of India has also suggested that the country should embrace insurance to achieve universal health coverage. General tax revenue is currently used to meet the essential health requirements of all people.

Community-based health insurance

A particular form of private health insurance that has often emerged, if financial risk protection mechanisms have only a limited impact, is community-based health insurance. Individual members of a specific community pay to a collective health fund which they can draw from when they need medical care. Contributions are not risk-related and there is generally a high level of community involvement in the running of these plans. Community-based health insurance generally only play a limited role in helping countries move towards universal health coverage. Challenges includes inequitable access by the poorest that health service utilization of members generally increase after enrollment.

Implementation and comparisons

For a more comprehensive list, see List of countries with universal health care.

See also: Health system and Health care systems by country

Health spending per capita, in US$ purchasing power parity-adjusted, among various OECD countries. For later data see List of countries by total health expenditure per capita.

Universal health care systems vary according to the degree of government involvement in providing care or health insurance. In some countries, such as Canada, the UK, Italy, Australia, and the Nordic countries, the government has a high degree of involvement in the commissioning or delivery of health care services and access is based on residence rights, not on the purchase of insurance. Others have a much more pluralistic delivery system, based on obligatory health with contributory insurance rates related to salaries or income and usually funded by employers and beneficiaries jointly. Subnational disparities remain a barrier to achieving total coverage in emerging economies.

Sometimes, the health funds are derived from a mixture of insurance premiums, salary-related mandatory contributions by employees or employers to regulated sickness funds, and by government taxes. These insurance based systems tend to reimburse private or public medical providers, often at heavily regulated rates, through mutual or publicly owned medical insurers. A few countries, such as the Netherlands and Switzerland, operate via privately owned but heavily regulated private insurers, which are not allowed to make a profit from the mandatory element of insurance but can profit by selling supplemental insurance.

Universal health care is a broad concept that has been implemented in several ways. The common denominator for all such programs is some form of government action aimed at extending access to health care as widely as possible and setting minimum standards. Most implement universal health care through legislation, regulation, and taxation. Legislation and regulation direct what care must be provided, to whom, and on what basis. Usually, some costs are borne by the patient at the time of consumption, but the bulk of costs come from a combination of compulsory insurance and tax revenues. Some programs are paid for entirely out of tax revenues. In others, tax revenues are used either to fund insurance for the very poor or for those needing long-term chronic care.

A critical concept in the delivery of universal healthcare is that of population healthcare. This is a way of organizing the delivery, and allocating resources, of healthcare (and potentially social care) based on populations in a given geography with a common need (such as asthma, end of life, urgent care). Rather than focus on institutions such as hospitals, primary care, community care etc. the system focuses on the population with a common as a whole. This includes people currently being treated, and those that are not being treated but should be (i.e. where there is health inequity). This approach encourages integrated care and a more effective use of resources.

The United Kingdom National Audit Office in 2003 published an international comparison of ten different health care systems in ten developed countries, nine universal systems against one non-universal system (the United States), and their relative costs and key health outcomes. A wider international comparison of 16 countries, each with universal health care, was published by the World Health Organization in 2004. In some cases, government involvement also includes directly managing the health care system, but many countries use mixed public-private systems to deliver universal health care.

Health Coverage Reports

The 2023 report from the WHO and the World Bank indicates that the advancement towards Universal Health Coverage (UHC) by the year 2030 has not progressed since 2015. The UHC Service Coverage Index (SCI) has remained constant at a score of 68 from 2019 to 2021. It is reported that catastrophic out-of-pocket (OOP) health expenditures have impacted over 1 billion individuals globally. Additionally, in the year 2019, it was found that 2 billion people experienced financial difficulties due to health expenses, with ongoing, significant disparities in coverage. The report suggests several strategies to mitigate these challenges: it calls for the acceleration of essential health services, sustained attention to infectious disease management, improvement in health workforce and infrastructure, the elimination of financial barriers to care, an increase in pre-paid and pooled health financing, policy initiatives to curtail OOP expenses, a focus on primary healthcare to reinforce overall health systems, and the fortification of collaborative efforts to achieve UHC. These measures aim to increase health service coverage by an additional 477 million individuals by the year 2023 and to continue progress towards covering an extra billion people by the 2030 deadline.

Politics

See also: Health politics and Health policy

Critics of universal healthcare claim that it leads to longer wait times and a decrease in the quality of healthcare. They claim that quality is lower due to budget constraints and overburdened medical staff. For example, many patients in Canada may go to the United States for medical care due to the long wait times. Some believe that government-run healthcare systems are less efficient than private ones, leading to potential waste and mismanagement. Other critics point out the potential of overuse and abuse leading to insolvency. Relatedly, some also argue that universal health care can be extremely expensive for governments to maintain, leading to higher taxes and potential strain on public finances, such as those in the Nordic countries, Australia, and New Zealand. For countries that do not currently have universal healthcare like the United States, they argue it would raise healthcare expenditures due to the high cost of implementation that the United States government supposedly cannot afford.

However, most of the resistance to universal healthcare in the United States is rooted in ideology. For example, critics of implementing universal healthcare in the United States claim that it would require healthy people to pay for the medical care of unhealthy people, which goes against the American values of personal responsibility. Also, they argue it represents unnecessary government overreach into the lives of American citizens and employers as it denies them individual choice. In other words, it may limit the choices available to patients, as the government may control which treatments and medications are covered. Lastly, it would unfairly limit the healthcare and health insurance industry.

According to a 2020 study published in The Lancet, the proposed Medicare for All Act would save 68,000 lives and $450 billion in national healthcare expenditure annually. A 2022 study published in the PNAS found that a single-payer universal healthcare system would have saved 212,000 lives and averted over $100 billion in medical costs during the COVID-19 pandemic in the United States in 2020 alone. Given the high prevalence of uninsured and under-insured people in the United States, if implemented, universal health care would increase health care access for more than 25 million Americans.

Benefit corporation

From Wikipedia, the free encyclopedia

https://en.wikipedia.org/wiki/Benefit_corporation

Map of U.S. states which have passed laws allowing the formation of benefit corporations:

  Passed into law.
  No existing law.
  Bill failed a vote in the state's legislature.

In business, particularly in United States corporate law, a benefit corporation (or in some states, a public benefit corporation) is a type of for-profit corporate entity whose goals include making a positive impact on society. Laws concerning conventional corporations typically do not define the "best interest of society", which has led to the belief that increasing shareholder value (profits and/or share price) is the only overarching or compelling interest of a corporation. Benefit corporations explicitly specify that profit is not their only goal. An ordinary corporation may change to a benefit corporation merely by stating in its approved corporate bylaws that it is a benefit corporation.

A company chooses to become a benefit corporation in order to operate as a traditional for-profit business while simultaneously addressing social, economic, and/or environmental needs. For example, a 2013 study done by MBA students at the University of Maryland showed that one main reason businesses in Maryland had chosen to file as benefit corporations was for community recognition of their values. A benefit corporation's directors and officers operate the business with the same authority and behavior as in a traditional corporation, but are required to consider the impact of their decisions not only on shareholders but also on employees, customers, the community, and the local and global environment. For an example of what additional impacts directors and officers are required to consider, view the Maryland Code § 5-6C-07 – Duties of director. The nature of the business conducted by the corporation does not affect its status as a benefit corporation. Instead, it provides a justification for including public benefits in their missions and activities.

The benefit corporation legislation ensures that a director is required to consider other public benefits in addition to profit, preventing shareholders from using a drop in stock value as evidence for dismissal or a lawsuit against the corporation. Transparency provisions require benefit corporations to publish annual benefit reports of their social and environmental performance using a comprehensive, credible, independent, and transparent third-party standard. However, few of the states have included provisions for the removal of benefit corporation status or fines if the companies fail to publish benefit reports that comply with the state statutes.

Although approximately 36 jurisdictions now authorize the creation of benefit corporations, outside of those jurisdictions there are no legal standards that define what constitutes a benefit corporation. With jurisdictions that recognize this form of business, a benefit corporation is intended "to merge the traditional for-profit business corporation model with a non-profit model by allowing social entrepreneurs to consider interests beyond those of maximizing shareholder wealth." In jurisdictions where regulations have not been enacted, a benefit corporation need not be certified or audited by the third-party standard. Instead, it may use third-party standards solely as a rubric to measure its own performance.

Some research suggests a possible synergy between a benefit corporation and employee ownership.

History

United States

In April 2010, Maryland became the first U.S. state to pass benefit corporation legislation. As of March 2018, 36 states and Washington, D.C., have passed legislation allowing for the creation of benefit corporations: and enhance corporate responsibility.

State	Date passed	Date in effect	Legislation
Alabama	December 31, 2020	January 1, 2021	Act 2020-73, §8.
Arizona	April 30, 2013	December 31, 2014	SB 1238 Archived March 4, 2016, at the Wayback Machine
Arkansas	April 19, 2013	July 18, 2013	HB 1510
California	October 9, 2011	January 1, 2012	AB 361
Colorado	May 15, 2013	April 1, 2014	HB 13-1138
Connecticut	April 24, 2014	October 1, 2014	SB 23, HB 5597 Section 140
Delaware	July 17, 2013	August 1, 2013	SB 47
Georgia	July 29, 2020	January 1, 2021	HB 230
Florida	June 20, 2014	July 1, 2014	SB 654, HB 685
Hawaii	July 8, 2011	July 8, 2011	SB 298
Idaho	April 2, 2015	July 1, 2015	SB 1076
Illinois	August 2, 2012	January 1, 2013	SB 2897
Indiana	April 30, 2015	July 1, 2015	HB 1015
Iowa	June 8, 2021	June 8, 2021	HB 844
Kansas	March 30, 2017	July 1, 2017	HB 2153
Kentucky	March 7, 2017	July 1, 2017	HB 35 Archived June 7, 2017, at the Wayback Machine
Louisiana	May 31, 2012	August 1, 2012	HB 1178 Archived September 21, 2021, at the Wayback Machine
Maine	Jun 17, 2019	Jun 17, 2019	LD 1519
Maryland	April 13, 2010	October 1, 2010	SB 690/HB 1009
Massachusetts	August 7, 2012	December 1, 2012	2012 Acts, Chapter 238
Minnesota	April 29, 2014	January 1, 2015	SF 2053, HF 2582
Montana	April 27, 2015	October 1, 2015	HB 2458
Nebraska	April 2, 2014	July 18, 2014	LB 751
Nevada	May 24, 2013	January 1, 2014	AB 89 Archived June 7, 2015, at the Wayback Machine
New Hampshire	July 11, 2014	January 1, 2015	SB 215
New Jersey	January 10, 2011	March 1, 2011	S 2170 Archived September 26, 2015, at the Wayback Machine
New Mexico	February 18, 2020	February 18, 2020	HB 118, Bill History
New York	December 12, 2011	February 10, 2012	A4692-a and S79-a
Ohio	December 18, 2020	March 24, 2021	SB 21
Oklahoma	April 15, 2019	November 1, 2019	HB 2423
Oregon	June 18, 2013	January 1, 2014	HB 2296
Pennsylvania	October 12, 2012	January 1, 2013	HB 1616
Rhode Island	July 17, 2013	January 1, 2014	HB 5720
South Carolina	June 6, 2012	June 14, 2012	HB 4766
Tennessee	May 20, 2015	January 1, 2016	HB 0767/SB 0972
Texas	June 14, 2017	September 1, 2017	HB 3488
Utah	April 1, 2014	May 13, 2014	SB 133
Vermont	May 19, 2010	July 1, 2011	S 263
Virginia	March 26, 2011	July 1, 2011	HB 2358
Washington, D.C.	February 8, 2013	May 1, 2013	B 19-058 Archived September 27, 2015, at the Wayback Machine
West Virginia	March 31, 2014	July 1, 2014	SB 202
Wisconsin	November 27, 2017	February 26, 2018	SB298 Act 77

Connecticut's benefit corporation law is the first to allow "preservation clauses", which allow the corporation's founders to prevent it from reverting to a 'For Profit' entity at the will of their shareholders.

Public benefit LLCs

A subset of benefit corporation, the public benefit LLC, allows for limited liability companies the same opportunities afforded to corporations under a state's benefit corporation law.

State		Date passed	Date in effect	Legislation
Delaware		July 23, 2018	August 1, 2018	SB 183, 149th Gen. Assem.
Kansas		April 18, 2019	July 1, 2019	HB 2039
Maryland		May 19, 2011	June 1, 2011	HB 1511, SB 595
Oregon		June 18, 2013	January 1, 2014	HB 2296
Pennsylvania		November 21, 2016	February 19, 2017	HB 1398
Utah		March 19, 2018	March 19, 2018	HB 186

Similar bills have been introduced in Connecticut and Illinois.

Social purpose corporations

Main articles: Social purpose corporation and Flexible purpose corporation

Some states have passed legislation for creating social purpose corporations (SPCs), which are more flexible in their legal requirements and responsibilities compared to benefit corporations.

State	Date passed	Date in effect	Legislation
California	October 9, 2011	January 1, 2012	SB 201 and SB 1532 for FPCs; revised and renamed as SPCs in 2015 via SB 1301
Florida	June 20, 2014	July 1, 2014	SB 654, HB 685
Washington	March 30, 2012	June 7, 2012	HB 2239

Low-profit limited liability companies

Main article: low-profit limited liability company

Low-profit limited liability companies (L3Cs) were created to comply with the Internal Revenue Service (IRS) program-related investments (PRIs) rules (26 U.S.C. § 170(c)(2)(B)) which allow most typically private foundations the ability to maintain tax-exempt status through investments in qualifying businesses and/or charities. They blend aspects of law regarding limited liability companies with aspects of non-profit law, but remain for-profit companies for tax purposes.

State	Date passed	Date in effect	Legislation
Illinois	August 4, 2009	January 1, 2010	SB 239
Louisiana	June 21, 2011	June 21, 2011	HB 1421
Maine	June 8, 2009	June 8, 2009	LD 1265
Michigan	January 15, 2009	January 15, 2009	SB 1446
Rhode Island	June 8, 2011	January 1, 2012	SB 0353
Utah	April 1, 2013	May 14, 2013	SB 21
Vermont	April 30, 2008	April 30, 2008	HB 775
Wyoming	February 26, 2009	July 1, 2009	HB 0182

Outside of the United States

Canada

In May 2018, the leader of the British Columbia Green Party introduced a bill to amend the Business Corporations Act to permit the incorporation of "benefit companies" in British Columbia.^[17] On June 30, 2020, British Columbia became the first province in Canada to offer the option of incorporating as a benefit company.

Colombia

In 2018, Colombia introduced benefit corporation legislation.

Israel

Israeli law defines a public benefit company in chapter 9 of its Companies Law, with the current definition stemming from a 2007 amendment. Public benefit companies may only draw their stated goals from a closed list codified in law, and are prohibited from distributing dividends.

Italy

In December 2015, the Italian Parliament passed legislation recognizing a new kind of organization, named Società Benefit, which was directly modeled after benefit corporations in the United States.

United Kingdom

In the United Kingdom, Community Interest Companies (CIC) were introduced in 2005, intended "for people wishing to establish businesses which trade with a social purpose..., or to carry on other activities for the benefit of the community".

Differences from traditional corporations

Historically, U.S. corporate law has not been structured or tailored to address the situation of for-profit companies that wish to pursue a social or environmental mission. While corporations generally have the ability to pursue a broad range of activities, corporate decision-making is usually justified in terms of creating long-term shareholder value.

The idea that a corporation has as its purpose to maximize financial gain for its shareholders was first articulated in Dodge v. Ford Motor Co. in 1919. Over time, through both law and custom, the concept of "shareholder primacy" has come to be widely accepted. This was reaffirmed in 2010 for Delaware corporations by the case eBay Domestic Holdings, Inc. v. Craig Newmark, et al., 3705-CC, 61 (Del. Ch. 2010)., in which the Delaware Chancery Court stated that a non-financial mission that "seeks not to maximize the economic value of a for-profit Delaware corporation for the benefit of its stockholders" is inconsistent with directors' fiduciary duties. However, the fiduciary duties do not list profit or financial gains specifically, and to date no corporate charters have been written that identify profit as one of those duties.

In the ordinary course of business, decisions made by a corporation's directors are generally protected by the business judgment rule, under which courts are reluctant to second-guess operating decisions made by directors. In a takeover or change of control situation, however, courts give less deference to directors' decisions and require that directors obtain the highest price in order to maximize shareholder value in the transaction. Thus a corporation may be unable to maintain its focus on social and environmental factors in a change of control situation because of the pressure to maximize shareholder value.

Mission-driven businesses, impact investors, and social entrepreneurs are constrained by this legal framework, which is not equipped to accommodate for-profit entities whose mission is central to their existence.

Even in states that have passed "constituency" statutes, which permit directors and officers of ordinary corporations to consider non-financial interests when making decisions, legal uncertainties make it difficult for mission-driven businesses to know when they are allowed to consider additional interests. Without clear case law, directors may still fear civil claims if they stray from their fiduciary duties to the owners of the business to maximize profit.

By contrast, benefit corporations expand the fiduciary duty of directors to require them to consider non-financial stakeholders as well as the interests of shareholders. This gives directors and officers of mission-driven businesses the legal protection to pursue an additional mission and consider additional stakeholders. The enacting state's benefit corporation statutes are placed within existing state corporation codes so that the codes apply to benefit corporations in every respect except those explicit provisions unique to the benefit corporation form.

Provisions

Typical major provisions of a benefit corporation are:

Purpose

• Shall create general public benefit.
• Shall have the right to name specific public benefit purposes
• The creation of public benefit is in the best interests of the benefit corporation.

Accountability

• Directors' duties are to make decisions in the best interests of the corporation
• Directors and officers shall consider effect of decisions on shareholders and employees, suppliers, customers, community, environment (together the "stakeholders")

Transparency

• Shall publish annual Benefit Report in accordance with recognized third party standards for defining, reporting, and assessing social and environmental performance
• Benefit Report delivered to: 1) all shareholders; and 2) public website with exclusion of proprietary data

Right of action

• Only shareholders and directors have right of action
• Right of action can be for 1) violation of or failure to pursue general or specific public benefit; 2) violation of duty or standard of conduct

Change of control/purpose/structure

• Shall require a minimum status vote which is a 2/3 vote in most states, but slightly higher in a few states

Benefit corporations are treated like all other corporations for tax purposes.

Benefits

Benefit corporation laws address concerns held by entrepreneurs who wish to raise growth capital but fear losing control of the social or environmental mission of their business. In addition, the laws provide companies the ability to consider factors other than the highest purchase offer at the time of sale, in spite of the ruling on Revlon, Inc. v. MacAndrews & Forbes Holdings, Inc. Chartering as a benefit corporation also allows companies to distinguish themselves as businesses with a social conscience, and as one that aspires to a standard they consider higher than profit-maximization for shareholders. Yvon Chouinard, founder of Patagonia, has written "Benefit corporation legislation creates the legal framework to enable companies like Patagonia to stay mission-driven through succession, capital raises, and even changes in ownership, by institutionalizing the values, culture, processes, and high standards put in place by founding entrepreneurs."

Oregon House Bill 3572, signed by the governor of Oregon in July 2023, allows public contracting agencies to award contracts to benefit corporations if the cost of the goods and services is not more than 5% higher than that available from another company.

Benefit corporation vs. certified benefit corporation

There is a difference between being filing as a benefit corporation in a state, and being a certified benefit corporation also known as a B Corporation. B Corporations voluntarily promise to run their firm with social and environmental causes as a concern. To receive their certification from B Lab they must score a minimum of 80 out of 200 on a survey called the B impact assessment. Next, they will have to pass through an audit process. Finally, the firms wishing to remain certified will be required to pay an annual fee to B Lab. Furthermore, companies will pledge to incorporate as a benefit corporation before their re-certification.

Benefit corporations and cooperatives

Benefit corporations are not synonymous with cooperatives, which are a type of corporate governance in which the governance and shares are equally held by their members, such as all employees or all consumers. However, a benefit corporation may also be organized as a cooperative or vice versa.

Taxation

A public benefit corporation is a legal entity that is organized and taxed as either an S corporation or C corporation. An S or C corporation will not change its tax status upon transferring to a public benefit corporation, while an LLC, partnership or sole proprietorship will have to. While public benefit corporations are taxed the same as their underlying corporation status, there is added benefit to taxation on charitable contributions. If a firm makes donations to a qualifying non-profit, the charitable contributions receive a tax-deductible status. This will lower a firm's taxes compared to a typical C-corporation that is not donating money and only focusing on short term profits.

Possible incentives to change to a benefit corporation

Reorganizing as a public benefit corporation affords a corporation's directors and founders protection from shareholder lawsuits when pursuing decisions that benefit the public at the expense of short-term profits. Furthermore, firms that transition typically experience advantages in retaining employees, increasing their customer loyalty and attracting prospective talent that will mesh well into the company culture.

Transition process

Changing status to a public benefit corporation requires several steps. First, the firm should choose one or more specific public benefit projects that it will pursue. Next, the articles of incorporation should be amended to state at the beginning that the firm is a public benefit corporation. The term public benefit corporation (PBC) or another abbreviation may be added to the entity's name if the founders choose. Finally the share certificates that are issued by the entity should state that the firm is a public benefit corporation. A shareholder vote is required to amend the articles which must include "non-voting" shares. The vote must gain a two-thirds majority to pass, depending on the Articles of Incorporation. Shareholders should be notified early that dissenter's rights apply. Dissenter's rights mean that those that vote against the amendment and qualify, may require the company to buy back their shares at fair value before the change. Firms making the transition should also perform a "due diligence review" of their business contracts, affairs and status in order to avoid any unforeseen liability associated with changing the form of the entity.

The transition process is different state by state but for Colorado it is as follows. First, the firm must prepare the aforementioned amended articles. Then, they also amend their bylaws and assign responsibilities to the board of directors. Next, the amendments must be approved by the directors before going to a shareholder vote. Finally they file the amended articles of incorporation with the secretary of the state.

If the prior entity is an LLC or partnership there is an extra step required. For these entities the articles of incorporation themselves and the related bylaws must first be prepared and filed with the state secretary. Only then will it be possible to merge or transition the previous form into the benefit corporation.

Investor and consumer preferences

According to William Mitchell Law Review journal, about 68 million US customers have a preference for making decisions about their purchases based on a sense of environmental or social responsibility. Some individuals even go as far as using their purchases to "punish" companies for bad corporate behavior when it pertains to environmental or social cause. Others do the opposite, and use their purchasing power to reward firms that they believe are doing social or environmental good. The Mitchell Law Review also states that around 49% of Americans have at some point in time boycotted firms whose behavior they see as "not in the best interest of society." Recent research also suggests that when variables like price and quality are held constant, 87% of customers would switch from a less socially responsible brand to a more socially responsible competitor.