Bipartisan North Carolina bill that would restructure Blue Cross and Blue Shield advances in state House

close

Video

Fox News Flash top headlines for April 26

Fox News Flash top headlines are here. Check out what's clicking on Foxnews.com.

North Carolina’s dominant health insurance provider could transfer billions to a holding company instead of returning portions of that surplus to policyholders, under legislation that advanced Tuesday in the state House.

The House Health Committee passed a bill with broad bipartisan support that would restructure Blue Cross and Blue Shield of North Carolina, the largest nonprofit provider in all 100 counties, and allow it to behave more like its for-profit national competitors. The House Insurance Committee will debate the bill Wednesday.

While supporters argued it would eliminate a competitive disadvantage, state Insurance Commissioner Mike Causey blasted the bill as an attempt to undermine his regulatory authority and swindle more than 4 million North Carolinians out of money guaranteed to them under state law.

NEBRASKA BILL WOULD ALLOW HEALTHCARE PROVIDERS TO 'CONSCIENTIOUSLY OBJECT' TO PROCEDURES

"It's not Blue Cross's money — this is the people's money," he told legislators before the vote, urging them to protect his ability to hold insurers accountable to their consumers.

Causey, a Republican, told reporters Monday that he views the bill as Blue Cross' attempt to circumvent a state law that limits its reserves and would eventually require the company to refund some of that money to policyholders or lower its rates.

The bill would allow Blue Cross and the state's only other hospital service 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 over that parent company, Causey said, which could enable 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 let Blue Cross Blue Shield reorganize on April 24, 2023, in Raleigh, North Carolina. (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 authority to ensure the company focuses its investments on the health needs of North Carolinians.

Blue Cross and Blue Shield of North Carolina criticized Causey on Tuesday for his "mischaracterizations" of the legislation, arguing that the bill will allow it to improve efficiency and make investments that can better meet the needs of customers and communities. The company has said it would purchase other insurers to expand its services but has not indicated which it would buy.

"Blue Cross NC members deserve more than bureaucracy and burdensome regulations that make health care even more expensive," the company said in a statement.

Founded in the 1930s, the nonprofit was able to accumulate assets tax-free until a federal law ended its decades-long tax exemption in 1986. In continuing to maintain its nonprofit status, the company is subject to more regulations than for-profit companies operating in the state. It's currently required to have more in reserves than its competitors, which would not change under the bill.

BIDEN TO DRAW HEALTH CARE CONTRAST WITH GOP IN VIRGINIA

The holding company would need to file annual financial statements with Causey's office.

Blue Cross already has "tremendous business flexibility" and "dominates" the health insurance market with the largest market share of any insurer in the state, argued Rep. Donna White, a Johnston County Republican. She raised concerns Monday that the bill could stifle competition.

"What we want to make sure of is that citizens of North Carolina that have depended on this company ... have access, affordability and know that they’ve got health coverage that’s going to be taken care of when they need it," White said. "And that they’re not going to have to sue to get it."

The state treasurer announced in January that 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, starting in 2025. Pushed out by Aetna after administering the plan for over 40 years, Blue Cross has pointed to the for-profit national insurance giant as the kind of company it must modernize to compete with.

CLICK HERE TO GET THE FOX NEWS APP

Rep. John Bradford, a Mecklenburg County Republican and a primary 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.

Existing laws, he said, put Blue Cross and Delta Dental in a position where they have to ask the Department of Insurance and sometimes the attorney general's office for "permission to be able to use their own money."

"If they want to make investment, they have to go seek approval, versus their competitors can do it much quicker," Bradford said.

But Causey argues that money isn't theirs to invest. He demanded lawmakers "kill the bill" or implement his recommendations to better protect consumers — ideas he said have been largely discounted by lawmakers and lobbyists alike.

"Blue Cross NC should not be able to invest policyholder money with the freedom of a for-profit company using investor money," Causey said after a Monday news conference. Behind him, a large screen read, "This bill is about corporate greed."