Justice Department Widening Probe Into Premium Increases For Blues

If Eric Holder ends up indicting and convicting the Blues, I'll take back every snide comment I ever made about the Department of Justice:

The U.S. Justice Department is widening a probe into whether Blue Cross Blue Shield health-insurance plans are artificially raising premiums in several states by striking agreements with hospitals that stifle competition from rival insurers.

Federal investigators and some state attorneys general have sent civil subpoenas to "Blue" health plans in Missouri, Ohio, Kansas, West Virginia, North Carolina, South Carolina and the District of Columbia, according to people familiar with the matter.

The investigation is examining whether dominant health plans around the country are forcing hospitals to sign anticompetitive contracts that unlawfully inhibit them from doing business with their rivals.

The Justice Department's investigation comes as the Obama administration seeks to rein-in rising health-care expenses that threaten to drive up the government's costs for expanding care under President Barack Obama's health-care plan. Congressional Republicans and others have said the Affordable Care Act, Mr. Obama's signature domestic policy achievement, won't lead to lower insurance premiums. Showing that the administration can counter rising premiums by encouraging greater competition could help win support for the law from a skeptical public.

The contractual provisions under scrutiny are known as "most-favored nation" clauses. They usually stipulate that hospitals must charge the insurers' competitors equal or higher prices for medical services.

Such clauses aren't in themselves illegal—they can simply be guarantees to get the best pricing available. But they can violate antitrust laws if used improperly by a dominant company to hobble competitors.

Blue plans tend to be state- or regionally-based and therefore have the market clout to strike such deals with hospitals. While national plans such as UnitedHealth Group Inc. and Aetna Inc. tend to be larger, they are more spread out and typically lack the concentration of a Blue plan in a given local market.

A Justice Department spokeswoman said: "The antitrust division is investigating the possibility of anticompetitive practices involving MFN clauses in various parts of the country."

These insurance contracts are written with all kinds of unfair and non-competitive restrictions. Did you know that when doctors sign an agreement with an insurance company to accept their users, they also agree that they won't offer lower prices to patients who don't have insurance? So even if your doctor wants to cut you a break, he can't.

Comments

We welcome relevant, respectful comments. Any comments that are sexist or in any other way deemed hateful by our staff will be deleted and constitute grounds for a ban from posting on the site. Please refer to our Terms of Service (revised 3/17/2016) for information on our posting policy.