Bill Altering Competition Among Health Insurers Faces NCGA Deadline | Eastern North Carolina Now

   Publisher's note: The author of this fine report is Barry Smith, who is a contributor for the Carolina Journal, John Hood Publisher.

Measure backed by small insurers, opposed by Blue, may die at adjournment

    RALEIGH     As the 2012 short session of the General Assembly approaches adjournment, smaller health insurance companies are still fighting for a bill that they hope would make the industry more competitive in the state.

    The bill, which already has passed the Senate, would prohibit providers (such as doctors and hospitals) from entering into a contact with an insurance company that bans the provider from contracting with other insurance companies to offer services at an equal or lower rate.

    The state's largest health insurance company, Blue Cross and Blue Shield of North Carolina, opposes the bill.

    Supporters say that the bill is all about fostering competition.

    Ken Lewis, who heads the N.C. Association of Health Plans, said that a decade ago there were 30 health insurance plans in North Carolina. "Today there are seven," Lewis said. "There's not a lot of competition."

    A Blue Cross spokesman said that the bill would amount to the government stepping into private business decisions unnecessarily.

    "We don't think government should be involved in contracts between private parties," said Lew Borman, a Blue Cross spokesman.

    Borman said that Blue Cross does not use such practices, commonly called "most favored nation" clauses, anymore. "We want to keep that option open."

    The bill, introduced by Sen. Tom Apodaca, R-Henderson, passed the Senate last year. It was taken up in the House on Thursday, but wasn't voted on. Its chances appear to be dimming as the General Assembly marches toward what they hope will be an adjournment early next week.

    "Most favored nation" is a term that is normally associated with international trade policies in which countries are required to give equal advantages to other countries when it comes to trade policies.

    Lewis notes that the term has caught on to contracts, such as those sought by health insurers with doctors and hospitals.

    Lewis said that health insurers, to be viable, must be able to provide competitive pricing and have a competitive network.

    He said if the dominant health insurer in a market is allowed to negotiate such a contract with providers, then the providers are unlikely to negotiate as favorable a contract with other insurers.

    "What we're trying to do here is level the playing field," Lewis said. He said it's the proper role of the government to step in when competition is constrained and the free market isn't allowed to work.

    Borman, however, said that such agreements would be beneficial to their customers. "It guarantees them the lowest rate," Borman said.