Global Courant 2023-04-26 20:12:36
North Carolina’s dominant health insurer could transfer billions to a holding company instead of returning portions of that surplus to policyholders, under legislation introduced Tuesday in the state House.
The House Health Committee passed a bill with broad bipartisan support that would restructure North Carolina’s Blue Cross and Blue Shield, the largest nonprofit in all 100 counties, and allow it to behave more like its national for-profit competitors . The House Insurance Committee will debate the bill on Wednesday.
While supporters argued it would remove a competitive disadvantage, state insurance commissioner Mike Causey condemned the bill as an attempt to undermine his regulatory authority and defraud more than 4 million North Carolinans of money guaranteed to them under state law.
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“It’s not Blue Cross’s money — this is the people’s money,” he told lawmakers ahead of the vote, urging them to protect his ability to hold insurers liable to their consumers.
Causey, a Republican, told reporters Monday he sees the bill as an attempt by Blue Cross to circumvent a state law that caps its reserves and would eventually require the company to pay back some of that money to policyholders or lower rates. lowers.
The bill would allow Blue Cross and the state’s only other hospital services company, Delta Dental, to essentially create a shell company with the same executive leadership that would have more flexibility to move and use money.
The state Department of Insurance would have little oversight of that parent company, Causey said, allowing Blue Cross to “hoard” its nearly $4.6 billion in reserves. Both companies would remain fully taxed nonprofits.
North Carolina insurance commissioner Mike Causey talks to reporters about a bill that would see Blue Cross Blue Shield reorganized in Raleigh, North Carolina on April 24, 2023. (AP Photo/Hannah Schoenbaum)
The agency would be required under the bill to review and approve the reorganization to ensure it complies with state law. Causey would have the authority to ensure that the company focuses its investments on the health needs of North Carolinians.
North Carolina’s Blue Cross and Blue Shield criticized Causey on Tuesday for its “mischaracterizations” of the legislation, arguing that the bill will allow it to improve efficiency and make investments that better meet customer needs and communities. The company has said it would buy other insurers to expand its services, but did not specify which one it would buy.
“Blue Cross NC members deserve more than bureaucracy and burdensome regulations that make healthcare even more expensive,” the company said in a statement.
Founded in the 1930s, the nonprofit was able to build tax-free wealth until a federal law in 1986 ended the decades-long tax exemption. To maintain its non-profit status, the business is subject to more regulations than for-profit businesses operating in the state. It is currently required to have more reserves than its competitors, which would not change by law.
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The holding company would have to file the annual accounts with Causey’s office.
Blue Cross already has “tremendous business agility” and “dominates” the health insurance market with the largest market share of any insurer in the state, Rep. argued. Donna White, a Republican from Johnston County. She expressed concern on Monday that the bill could stifle competition.
“What we want to make sure is that citizens of North Carolina who have depended on this company … have access, are affordable, and know they have health insurance that’s taken care of when they need it,” White said. “And that they don’t have to sue to get it.”
The state treasurer announced in January that starting in 2025, Blue Cross will no longer be the administrator of the health insurance plan for more than 740,000 state government employees, teachers and their families. Blue Cross has pointed to the for-profit national insurance giant as the kind of company it needs to modernize to compete with.
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Rep. John Bradford, a Mecklenburg County Republican and a lead sponsor, said the proposal “levels the playing field” and serves as an economic development tool for Blue Cross to grow so it can create more jobs in the state.
The existing laws, he said, put Blue Cross and Delta Dental in a position where they must ask the Department of Insurance and sometimes the attorney general’s office for “permission to use their own money.”
“If they want to invest, they have to start seeking approval, while their competitors can do it much faster,” Bradford said.
But Causey argues that money is not theirs to invest. He demanded lawmakers “kill the bill” or implement his recommendations to better protect consumers — ideas he says have been largely rejected by lawmakers and lobbyists alike.
“Blue Cross NC should not be able to invest policyholders’ money with the freedom of a for-profit company using investor money,” Causey said after a press conference Monday. Behind him, a large screen read: “This bill is about corporate greed.”
