North Carolina Insurance Commissioner slams hospital reorganization bill as 'corporate greed'
A bill allowing hospital service corporations, including Blue Cross Blue Shield of North Carolina, to reorganize by creating a nonprofit holding corporation is facing fierce opposition from the state's Republican Insurance Commissioner, Mike Causey, who has labeled the proposal as "all about corporate greed." The bill, which has broad bipartisan support in the legislature, has been criticized for potentially evading scrutiny and avoiding a legal trigger that could lower customer premiums.
“Even with simple corporate transactions the devil’s in the details,” Causey said in a previously reported interview. “I say with this bill the devil’s in the lack of details.”
House Bill 346 aims to modernize outdated regulations, enabling Blue Cross to operate more efficiently, maintain its not-for-profit status, and invest in solutions that improve access and affordability of healthcare. However, Causey claims that the company's lobbying team has resisted his efforts to include more oversight in the bill, resulting in the state's largest insurer obscuring company finances.
Under the bill, Blue Cross and Delta Dental, the state's only other entity organized as a "hospital service company," would create a holding company owning the insurance business. This holding company would not be subject to the same level of regulatory scrutiny that Blue Cross currently faces, allowing executives to move some of the $4.6 billion in reserves to the holding company.
Proponents argue that this change would give Blue Cross more flexibility to invest and enter partnerships, helping it remain competitive against larger national insurers. Rep. John Bradford, the bill's lead sponsor in the House, stated that the current law puts Blue Cross at a disadvantage compared to for-profit competitors, as Causey's office has to approve investments before they are made.
“I think that this legislation is missing many provisions that’s necessary to protect the people, the policyholders,” Causey said. “[It] does not provide for a meaningful review of reorganization.”
However, Causey contends that the bill is a tool for Blue Cross to circumvent legislation by moving money out of the state Department of Insurance's regulatory reach. He questions the implications of executives being able to pay million-dollar bonuses when the department is watching and wonders what they could do when not under scrutiny.
Despite Causey's concerns, the measure has widespread support among lawmakers, with more than 50 sponsors in the House and 35 in the Senate. Blue Cross is a major campaign donor for state lawmakers, having contributed nearly $260,000 to legislative campaigns last year, according to State Board of Elections records.
Gov. Roy Cooper has not yet taken a public position on the bill. A coalition of progressive groups, including the N.C. Justice Center, has urged the governor to oppose the legislation. Blue Cross has disagreed with the groups' characterization of the bill, claiming that it is the solution for expanding access and services, maintaining their not-for-profit mission and status, and avoiding conversion to a for-profit company.
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