Antitrust lawsuits in Alabama claim that Blue Cross and Blue Shield health plans nationally, including Louisiana’s, are acting as an illegal cartel, according to a story in The Wall Street Journal.
The 37 independently owned health plans cover roughly a third of Americans. The lawsuits were filed by providers, individuals and small groups spread across the country. The Louisiana plaintiffs include Galactic Funk Touring Inc. and Renee E. Allie, both Blue Cross policyholders from New Orleans.
In Alabama, Blue Cross has 97 percent of the small-group health plan market, or companies with less than 100 employees, according to figures from the Kaiser Family Foundation. In Louisiana, Blue Cross has 81 percent of the small-group health plan market.
The federal lawsuits in Alabama allege that the 37 Blue Cross plans nationally are conspiring to divide markets and avoid competing against one another. The lawsuits say these practices drive up customers’ prices while lowering the amounts paid to doctors and other health care providers.
From 2000 to 2007, Louisiana health insurance premiums increased by 75.3 percent, more than three times faster than Louisiana wages, the lawsuit says.
“These rising premiums have enabled BCBS-LA (Blue Cross Blue Shield of Louisiana) to lavishly compensate its executives and grow its surplus in excessive amounts, unusual practices for a self-described nonprofit organization,” the lawsuit says.
Blue Cross Louisiana’s “inflated premiums” enabled the company to amass a massive surplus, some $706.6 million at the end of 2010, the lawsuit says.
Blue Cross and Blue Shield of Louisiana referred questions about the lawsuits to the national association.
Caleb Weaver, a spokesman for the national association, said the health plans are independent, community-based and locally operated and have provided health coverage to policyholders for more than 80 years.
Over that time, numerous courts and regulatory agencies have validated the Blue Cross model of service, Weaver said.
“The plaintiffs’ claims simply have no merit, and we are vigorously defending ourselves in this litigation,” Weaver said.
Antitrust experts who aren’t involved in the litigation told The Wall Street Journal that the lawsuits pose a high-stakes test for the Blue Cross plans. But the lawsuits are expected to take years to play out, unless a settlement is negotiated.
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