Legislature approves bill allowing Blue Cross Blue Shield NC to reorganize

The N.C. Senate gave final approval Tuesday to a bill that allows the non-profit Blue Cross Blue Shield North Carolina and Delta Dental to reorganize and create a holding company for billions in surplus revenue. The measure passed the Senate with a bipartisan vote of 41 to 5. Five Senate Democrats voted against it. It passed 86-26 in the House last month.

Rep. John Bradford, R-Mecklenburg, one of the sponsors of H.B. 346, Reorganization & Economic Development Act, said it works to level the playing field for Delta Dental and BCBSNC, two hospital service corporations. He said the not-for-profit entities currently under state law don’t have the same flexibility as other companies.

Ahead of the vote, N.C. State Treasurer Dale Folwell urged lawmakers to remove it from the Senate calendar and consider amendments suggested by State Insurance Commissioner Mike Causey.

“Blue Cross Blue Shield has had a monopolistic market share for decades as well as a preferred status among state insurers,” Folwell said in a statement. “This has resulted in Blue Cross Blue Shield accruing billions of dollars of reserves that rightfully belong to policy holders who have been punished for decades with higher premiums and declining customer service.” 

The bill has faced opposition stirred by Causey, who argued that Department of Insurance would have no say over how much policyholder money would be taken out of the insurance company and put into the holding company. However, Causey’s department retains oversight over BCBSNC as an insurance company.

In comments before the Senate Commerce and Insurance Committee last week, Causey also compared the bank failures in the U.S. this year and BCBSNC.

“If you look at what’s happened this year, we’ve had three major bank failures, the second and third largest bank failures in United States history, and those banks fail not because of criminal activity but because of poor oversight or no oversight,” he said. “Lack of regulatory controls. So that’s what Blue Cross is asking to do.”

Supporters of the bill admonished Causey in that meeting saying his campaign against the bill was ‘hyperbole.”

“This is not policyholder money,” Sen. Jim Perry said in committee. “That is a mischaracterization. Insurance companies have a mandate to pay out a certain percentage of every dollar in claims, but they have to do that, so anything left over does not belong to a policyholder.”

Supporters say the bill gives BCBSNC the same structure that other companies in the state have, like North Carolina Farm Bureau. The Department of Insurance also retains all oversight of Blue Cross insurance, and the legislative oversight remains in place.

“The bill does what it says it does; it is enabling legislation that would allow us to reorganize and modernize our structure and give us the best chance to remain a mission-driven North Carolina not-for-profit,” said Chris Evans, vice-president of public affairs for BCBSNC. “It is in direct support of our goals for affordability and access which are at the center of everything we do. Any claims to the contrary are just patently false.” 

The bill now goes to Gov. Roy Cooper for signature or veto. Under state law, it automatically becomes law after ten days of no action by the governor.

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