Looser regulations could benefit UNC and BCBSNC, but consumer advocates worry
A couple of bills under consideration at the General Assembly this year could dramatically loosen regulations for two of North Carolina's largest health care institutions: Blue Cross and Blue Shield of North Carolina and UNC Health.
WUNC's Midday News Host Naomi P. Brown sat down with WUNC Health Reporter Jason deBruyn to break down how the bills might impact both the organizations and North Carolinians.
This conversation has been lightly edited for clarity and brevity.
Naomi P. Brown: Let's address BCBSNC first. They've asked the General Assembly to loosen some regulations on them that would allow them to operate more like a for-profit company. Let's first talk about BCBSNC and what makes it different from other insurers like Aetna or Cigna.
Jason deBruyn: They are incorporated as a nonprofit and have in some ways taken that mission seriously. They are in all 100 counties, and in many rural parts of the state, are the only health insurance option available to people. Although they're a not-for-profit, BCBSNC has paid taxes since the mid-80s.
So they are fully taxed, but they still have restrictions on them that don't apply to other health insurers. How would this proposed legislation change that?
It would loosen the oversight that the North Carolina Department of Insurance has. BCBSNC says that in today's highly competitive world, that it needs to be more nimble and flexible when looking to make deals. It says it doesn't have any in the pipeline, but if a business opportunity were to come up, it wants to be able to act quickly.
State Insurance Commissioner Mike Causey has come out firmly against this bill. What is he saying about it?
He says it will greatly reduce transparency. Blue Cross Blue Shield would be able to transfer millions into a shell company and make investments from there. While his office would still oversee premium rate increases and other aspects of the insurance business, Causey is very concerned that his office would not have similar oversight of other investments that the new holding company might make. There have been some changes made to the bill that adds guardrails for how BCBSNC can invest that money, but not enough to satisfy Causey’s concerns. Here's how Causey reacted to the changes in the bill:
"Well, it’s been too little too late. I’ve talked with Blue Cross. The CEO told me, in their mind, they feel like they’ve given the Department of Insurance 90% of what we’ve asked for. My reaction is closer to 10% of what we’ve asked for.”
Let's pivot to UNC Health. That bill would give UNC Health more flexibility to make big business decisions — like buying a struggling rural hospital. But what do critics say?
Basically that it would allow UNC Health to be exempted from monopoly laws. Reading directly from the bill here, it says UNC could acquire other providers quote "without regard to their effect on market competition."
Critics say it’s a state action that lets UNC Health skirt federal antitrust regulations. Now, UNC Health says Federal Trade Commission rules would still apply. But Duke University antitrust expert Barak Richman says there's a loophole that the state legislature could use to apply to UNC. He just recently testified to Congress that this kind of anti-competitive action increases prices.
[He said,] "this bill would permit all of the monopolistic conduct that this committee and this hearing decries. This problem is not specific to North Carolina, but North Carolina is the most recent and in many ways the most brazen instance of this trend."
Why does UNC say it needs this?
UNC is the state's health system, and has in the past stepped in to save struggling hospitals. And it says having fewer regulations would allow it to move more quickly if it needed to do so again in the future.
Both bills passed in one chamber of the General Assembly, and will need to pass in the other chamber before they can go to Governor Cooper’s desk.