- Press Release
Blue Cross NC fast tracks bill to create holding company
Following a series of meetings with Blue Cross Blue Shield NC CEO Dr. Tunde Sotunde, Insurance Commissioner Mike Causey says he still opposes House Bill 346.
The Reorganization and Economic Development Act, as it is called, would allow the state’s largest insurer to create a parent holding company where it would move much of its $4.6 billion surplus created from policyholders’ money to be invested without the regulatory oversight Blue Cross NC has now. Commissioner Causey says, “Passing this bill is a sure way to raise health insurance premiums for Blue Cross NC policyholders.”
“Blue Cross NC has said this is a good bill, but I disagree,” Commissioner Causey said. “If it is such a good bill today, it will still be in two weeks’ time. There has been a large public outcry. The department and I have received hundreds of emails, calls and letters from the public from across the state, and not one person has stated that they disagree with our position. I’m very concerned that consumers’ concerns are falling on deaf ears.”
Last week, the bill was put on the fast track in the House, clearing three committees with little or no debate, before being put up for a floor vote with little notice. It passed the House by an 86-26 margin. Fifteen Democrats and 11 Republicans stood up to their respective party caucuses and voted against House Bill 346. It is now before the Senate’s Commerce and Insurance Committee.
Commissioner Causey said he personally called Dr. Sotunde to request that the bill be temporarily withdrawn so that the department can continue to meet with Blue Cross NC and work out key differences.
“Blue Cross NC’s attempts to fast track this legislation and side-step insurance regulations should be a warning sign for all consumers,” Commissioner Causey said. “Let’s slow down, take our time and continue to study this bill and make sure policyholders are protected. Without proper vetting, this is nothing more than a series of ‘dirty tricks’ that do not have the best interest of North Carolinians at heart. What’s the rush?”
Commissioner Causey said he remains hopeful that future discussion with Blue Cross NC officials and continued work with legislators will improve the bill and ensure that consumer protections and oversight remain in place.
Commissioner Causey’s three biggest concerns with the bill are:
It will allow Blue Cross NC to transfer policyholder money to an unregulated holding company, without adequate guardrails ensuring that the money will be invested for the benefit of North Carolina policyholders and citizens. The bill needs to make it clear that investments by the holding company are for the benefit of North Carolina policyholders and promote affordability, access, better health, or customer experience for North Carolina policyholders and citizens.
It will allow Blue Cross NC to work around statutory limits on its reserves. State law now requires Blue Cross NC to return money to policyholders or reduce rates once its reserves reach a certain threshold. Instead of returning money to policyholders when this limit is reached, Blue Cross NC would be able to transfer the money to its holding company. Circumventing this limit could also contribute to higher premiums. The bill must require the holding company to have a plan for returning money to policyholders when the earnings of the holding company exceed a predetermined limit.
It must more clearly state that a change in control, merger, or affiliation at the holding company level triggers the requirements of the conversion statutes. Currently, the bill is, at best, contradictory on this issue. It needs to be clear that the acquisition of any ownership interest, by any means, in the nonprofit holding company or an intermediate holding company controlling the hospital service corporation, shall be governed by the conversion statutes.