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North Carolina lawmakers move swiftly to restructure the state's largest health insurer


A measure that would grant North Carolina's biggest non-profit insurer broad leeway to operate like a for-profit company is one step closer to becoming law. House Bill 346 passed 86-26 in the House last week and is heading to the Senate. BPR's Helen Chickering checked in with NC Health News Editor Rose Hoban who has been following the measure.

RH: HB 346 has the pretty innocuous name of Reorganization and Economic Development Act. At first glance, you might think, "Oh, okay," but when you start reading it, you see that it is an act to establish a procedure for a hospital service corporation to reorganize by creating a nonprofit holding corporation.

 HC:  Before we go forward, help us understand -  what is a holding corporation?

RH: It is a legal entity, a paper corporation that becomes the parent for Blue Cross Blue Shield NC, which is the non-profit insurer in question here. It's a nonprofit itself, but what it can do is take money from Blue Cross's reserves into the holding corporation, and then use that money to do things like buy subsidiaries. The problem with that is that insurance companies are highly regulated, and in North Carolina, that regulation happens in the Department of Insurance. When money that's in reserve goes up to that holding corporation, it largely moves out of the regulatory authority of the insurance commissioner.

HC: And the insurance commissioner, Mike Causey, has been very outspoken about this, calling it a greedy move and saying the bill just doesn't give his department meaningful oversight to protect consumers. But there's not been much opportunity to express his point of view, at least to lawmakers. You've noted that before we hit the record button.

RH: That's right. There was less than a half hour total discussion about this bill in the House Health Committee that has implications for quite literally millions of North Carolina policyholders. It got 10 minutes of discussion, and eight of those minutes were from the bill sponsor who talked for eight whole minutes. There was no public input, there was no time for questions and answers from other lawmakers, and the state insurance commissioner got two minutes to speak. He came out with both guns blazing, saying that this is a bad bill, it's going to raise premiums, it's going to hurt people of North Carolina, and this is their money. And then the bill passed.

HC: What is Blue Cross saying about all of this?

RH: Well, Blue Cross keeps saying that they're not trying to do a for-profit conversion, they want to stay non-profit. But they get everything they want in terms of for-profit flexibility by having this holding company. So they'll never need to go for profit because they've already got everything they want in the non-profit status.

HC: And what's the argument for this bill – that BCBSNC needs to make the move to stay competitive?

RH: The line that we've been hearing over and over is that they need to be able to compete, they need to be more nimble, they need to be able to compete with other insurers.

Hc: Do we have any idea of the potential impact on Blue Cross customers?

RH: It's very speculative. Someone said to me last week, "Well, we've got to do it to see what's going to happen." Because we don't know. Could it raise premiums? Could it drive down premiums if they move towards more value-based care?

It's hard to know, Helen. It's really hard to know. And as a reporter who's spent 12 years at the legislature, what I'm seeing is a process that feels very rushed. You didn't have public comment on this bill, and you had an insurance commissioner made his feelings and thoughts about this bill very clear in a press conference. But the process has felt very pressed. And the bill sponsor will say, well no, this bill's been out there for weeks, but it wasn't moving. It wasn't moving. And you know, once the bill starts moving, then I sort of think about process like, are there people able to weigh in? Can they come in and sit in the back of a hearing committee and get up and speak? Right. And there, there wasn't a lot of that.  You can read more of NC Health News Editor Rose Hoban’s coverage of HB364 here.

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