National suit against Blue Cross may have NC implications
Posted June 12, 2015
A national class action lawsuit targeting Blue Cross Blue Shield could have a big impact on health insurance competition. The case is playing out in federal court in Alabama, but the implications reach to the Tar Heel State.
In the lawsuit, both consumers and health care providers allege that the Blue Cross brand used by affiliates all across the country violates anti-trust laws, artificially hikes rates for consumers and squeezes providers. The key question is whether the Blue Cross brand works like a franchise, with affiliates that compete in the marketplace but not against each other, or like a cartel, with carved out territories and limited competition.
In North Caroline, Blue Cross Blue Shield of North Carolina is a dominant insurance player, and it gets no competition from other Blues in nearby states.
Duke law professor Barak Richman called the threat to Blue Cross very, very serious.
"I'm skeptical this arrangement is pro-competitive and therefore would pass anti-trust muster. The law isn't necessarily on their side," he said.
A loss for Blue Cross would be a win for consumers. Richman said the case could lead to better rates through increased competition and possibly more innovative health insurance products.
The Blue Cross Blue Shield Association argues it's not doing anything wrong. In a statement, the association said it plans a vigorous defense.
"The Blue model of service has been validated and enforced by numerous courts and regulatory agencies over the past 80 years. The plaintiffs' claims simply have no merit," it said.
Given the dollars at stake, the political football that health care has become and the looming Supreme Court ruling on Affordable Care Act subsidies, this case could take years to resolve.