Local News

Report Says Blue Cross Conversion Would Lead To Pressure To Increase Rates

Posted May 21, 2003

— For the past year and a half, North Carolina's largest health insurer has lobbied to change its nonprofit status to for-profit. That has led to concerns over possible insurance rate hikes.

A new report shows that

Blue Cross officials say lawmakers may take away the tax break, anyway, and the loss could be absorbed through various parts of the company. But that's just one part of the latest conversion debate.

The arguments both for and against Blue Cross and Blue Shield's conversion have aired for months in radio ads. Now, a recently-released consultant's report is the latest source of debate.

"We think the report is generally supportive of conversion," Blue Cross vice president Brad Wilson said.

Wilson said the study reiterates that rising medical costs are the biggest reason insurance premiums keep climbing. But, if conversion is approved, the report states that serious pressure from stockholders could push Blue Cross to drive up rates for bigger profits.

"We will not pay dividends," Wilson said, "and dividends are typically the pressure point from stockholders to the company.

Still, said Department of Insurance spokesperson Chrissy Pearson, "stockholders want to see a company that's making money."

Pearson said the report also considers the possibility that some doctors might stop accepting Blue Cross patients and that some patients could no longer afford coverage.

"Those individual and small-group markets are particularly vulnerable," she said, "not only in terms of what policies are available, but also what the cost of those policies are."

The conversion debate always seems to revert back to money and whether or not patients will pay for Blue Cross profit.

"We're not in the business of raising rates," Wilson said. "That doesn't make good business sense."

Pearson's response: "The public deserves to know as much about this issue as they possibly can."

It's ultimately up to Insurance Commissioner Jim Long as to whether or not Blue Cross can convert to for-profit status. He could make his decision within the next few months.

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