The Blue Cross Blue Shield Association is currently defending itself from a class action lawsuit alleging they are operating in a non-competitive way in the health care industry. The plaintiffs who filed the lawsuit against the association allege it entered in non-compete agreements which allocated certain markets to sell health insurance and capped the amounts. That action increased premiums (what customers pay to insurance companies) and decreased the options and services customers would have for insurance. Attorneys for the plaintiffs state Blue Cross Blue Shield operated in this capacity for decades suppressing competition to inflate their profits at the expense of their customers. Since the lawsuit was filed plaintiffs have filed documents with the court stating the company charged different rates to its members other than what was stated to state insurance regulators. In 2018, United States District Court Judge Andrew Proctor, who oversees the MDL, issued a ruling that the division of territory by the company would be viewed as inherent violations of the Sherman Anti-Trust of 1890. Some reports state that the ruling could provide a legal framework for state attorney generals to challenge the way the company does business in the states. Blue Cross Blue Shield’s appeal of the ruling was rejected in December 2018. Recently, Law 360 reported the federal judge ordered the association’s attorneys to get their act together.
The Sherman Act bars companies from limiting trade of artificially raising prices. It was signed into law by President Benjamin Harrison. The act was initially used against Standard Oil Trust where trustees of individual companies centralized their shares into the company which centralized control. That allowed the company to function as a monopoly. The act was designed to restore competition. Individuals and companies that suffered losses due to Standard Oil’s actions could use in federal court for triple damages.
Most people think of the company as an insurance company, but in actuality it is a collection of insurance companies and organizations across the United States that are licensed to operate as Blue Cross Blue Shield. The company offers a mix of consumer, employer based and government insurance plans to its members. Offerings can include PPO (Preferred Provider Organization plan), EPO (Exclusive Provider Organization plan), HMO (Health Maintenance Organization plan), flexible spending accounts, health savings accounts (same as the medical savings accounts), and health reimbursement accounts.There are different benefits and drawbacks for each of the options offered. Members can include federal employees, military service members, members of Indian tribal nations, children and the elderly. Currently, the company states it insures over 100 million people in the United States including territories like Puerto Rico. Originally, Blue Cross Blue Shield was two separate associations. They merged in 1982.
(Flickr) Photo Credit: A Healthier Michigan
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