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Is BCBS stealthily stifling competition?

A June 26 article in Minnesota’s StarTribune sheds light on the anti-competition component of the class action suit against Blue Cross Blue Shield (BCBS).

Remember when we covered the $2.67 billion class action suit against several Blue Cross Blue Shield (BCBS) plans in Michigan and the claims accusing them of price-fixing to squelch competition? We noted that the insurance plans (collectively called the Blues) were gearing up to implement part of the settlement before the settlement was even approved. This had us scratching our heads. Why the urgency to settle the anti-competitive piece in particular?

Fast-forward to today, and here we have other folks questioning whether the move agreement will do what it’s meant to and increase healthy competition with other insurers. Joshua Haberman, owner of an independent insurance agency in Minnesota, told the StarTribune that the changes could actually, in a roundabout way, promote a consolidation trend that would benefit larger carriers like the Blues themselves. “It strengthens the incentive for the Blue Cross plans to merge,” he says. This increases the Blues’ market share, possibly blocking outside competition.

The StarTribute quotes C. Demuth in a court filing, who puts it bluntly: “This settlement should be rejected because it is proportionately lopsided; benefitting attorneys and BCBS far more proportionately than it benefits the claimants (the real victims).”

We’ll be tracking this case as it moves toward October 20—the day the court will decide whether or not to approve the settlement. If it’s approved, keep an eye out for how this affects competition. If it does, the ripple effect will likely lead to higher premiums, lower reimbursements, and other negative repercussions for those BCBS customers.

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