We’ve got an update on the antitrust suit against Blue Cross Blue Shield of Michigan—and it’s got a fun twist at the end. We’ve already covered part one of this story, about how more than a million employers and individual policyholders claimed to have been overcharged by BCBS, due to the insurer having (allegedly) divided up regional markets to avoid competing against one another. The plaintiffs said that this was a purposeful competition-stifling move that drove up their plans’ prices.
While not officially copping to any wrongdoing, the Blues have agreed to a number of concessions as part of the suit’s settlement agreement, which includes a substantial financial payout. Now, here’s the unexpected part. This settlement hasn’t actually been approved yet by the presiding judge, but the BCBS Association already went ahead and put into place a key action that could bring more competition into Michigan from out-of-state Blues plans. A few weeks ago, they scrapped the “revenue cap” designed to keep more than one Blues plan from existing in a certain market. This allows individual Blues to expand their businesses and compete against each other.
Seems like a commendable gesture, right? But let’s think it through. Removing this restriction will help increase competition among the Blues—but it is unlikely to do much in terms of increasing competition across the insurance industry as a whole. The way we see it, it will essentially allow the Blues, as a group, to increase their own market share in these regions, and possibly even block outside competition.
The question is, is BCBS’ action actually indicative of a positive new direction for the Blues? Or is it simply a PR move designed to distract customers and the media from the less savory side of this suit? We don’t know. But we’re looking forward to seeing how this story plays out.
