January 17, 2008
Blue Cross: Who Is Holding the Bag?
In mid-November, Blue Cross Blue Shield of Rhode Island applied for a 12% rate increase of its direct pay (i.e., non-group) products. Public hearings have been under way.
On December 13, 2007, US Attorney Robert Clark Corrente announced that as a part of Operation Dollar Bill, his office had reached an agreement with Blue Cross "under which the insurer will pay $20 million to resolve matters related to the government’s ongoing public corruption investigation" but that Blue Cross will not "seek any rate increases specifically to recoup the $20 million."
In a Providence Business News article posted December 13, 2007, however, the President of Blue Cross, James E. Purcell states that:
"The actual negotiations have been over the past several months and we concluded them just the other day.”
So Blue Cross was fully cognizent when it applied for this rate hike that it was facing a hefty monetary penalty.
Blue Cross is a non-profit organization. Its prime source of revenue is subscribers. If expenses rise, rates rise. Expenses rose in 2007 by $20million.
Is the substantial fine a part of the reason for the present rate hike request? Is a similarly motivated rate hike request for Blue Cross' other products in the works?
Blue Cross filings in support of the rate hike request lay out an elaborate case that the hike is or will be needed to maintain its reserves. Really? Affidavits by officers, directors and managers of Blue Cross that proceedings from this rate increase will not go towards the $20million fine or to replace existing monies that went to the $20million are not to be found among the filings. On that basis alone, the Health Insurance Commissioner must deny this rate increase request. In fact, unless and until the US Attorney's office reconsiders the $20million fine or correctly redirects it to the guilty parties, the Commissioner has no choice but to deny all future rate increase requests by Blue Cross.
Otherwise, Blue Cross subscribers will be left holding the wrong bag for the brown bag activity of Blue Cross.
Blue Cross is a non-profit. That doesn't mean they don't like profits and retained earnings. They just give it a different name - Reserve for Contingencies. We need competition and we need some health care plan options that aren't gold plated. BC/BS suffers United Healthcare to avoid out and out monopoly status, but there is no real competition.
Posted by: chuckR at January 17, 2008 9:29 AMJust like the RISDIC / DEPCO bailout, when taxpayers were left holding the bag for the insider dealing / corruption of the Democrat General Assembly.
Posted by: Tom W at January 17, 2008 11:54 AMWhere's the outrage? Come to think of it, where's Gio?
Posted by: George at January 17, 2008 12:49 PMIs this entirely in the hands of the insurance commissioner? Does the Gov. or the GA have any power to stop the increase?
This is outrageous.
Posted by: George at January 17, 2008 12:59 PMMy understanding, George, is that the Health Insurance Commissioner has full discretion to say yea or nay to this request.
I do not know offhand if the GA or the Governor have the specific power to step in. Working our way backwards, the HIC is an offshoot of DBR. Isn't that the Executive Branch?
And of course, the GA has inordinate power generally and presumably could be very unpleasant towards Blue Cross about this if they wanted.
Posted by: Monique at January 17, 2008 4:31 PM"None of this would have happened if this had been private property and private dollars."
This DID involve private money from a private party. If there was collusion, it involved greedy and corrupt business people, as well as greedy and corrupt government officials. If it was negligence on the part of government that lead to officials "forgetting" to get the agreement signed, I can't believe that Carpianato didn't notice.
There's no reason, except hating government, to say that this is just about government failings and not about business greed as well.
Posted by: chalkdust at January 17, 2008 5:12 PMSorry. I put that last comment under the wrong topic.
Posted by: chalkdust at January 17, 2008 5:19 PM