Here is another court case that asks questions about what is, and what is not, acceptable in regards to health insurance. This time the Justice Department is suing the Blue Cross Blue Shield Insurance company of Michigan. In this lawsuit, the question is about certain things that the insurance company is doing. Is the insurance company unlawfully preventing competition, and raising the cost of health insurance to it’s customers, or is it using the discounts it gets from hospitals to provide the best possible price to it’s customers?
The Justice Department says that Blue Cross Blue Shield has been engaging in practices that prevent competition and raise the cost of health insurance for consumers. It claims that the result is that consumers in Michigan are ending up having to pay more for their health insurance.
The Justice Department also feels that the specific agreements that this insurance company has made with hospitals guarantee that no other insurance company can get a better rate than Blue Cross will get. The deal demands that the hospitals increase their prices for the insurance companies that are competition for Blue Cross Blue Shield, and charge those competitors up to 40% more for the same things. This is preventing competition in an unfair way. The Justice Department has noticed that Blue Cross Blue Shield of Michigan has raised it’s rates 250% between 1999 and 2004, which is a much higher increase than what the rest of the insurance companies in the state of Michigan needed to do in that time period.
Why would the hospitals make this kind of agreement with an insurance company? It may have something to do with the cost of care, compared with the amount of payment. Hospitals do not get as much revenue from patients who are covered by Medicare or Medicaid as they do from patients who have private health insurance. This leaves a deficit. Perhaps the hospitals are using this deal with Blue Cross Blue Shield of Michigan to help with lost revenue. Blue Cross Blue Shield has agreed to increase it’s payouts to the hospital as part of this deal. This particular lawsuit, however, is not against the hospitals.
Blue Cross Blue Shield says it is providing the hospitals with “a reasonable reimbursement”. It also says that the deal it has with hospitals requires those hospitals to give “the deepest possible discount” available, so that the insurance company can give deliver “the best possible price”. The insurance company feels that it’s responsibility is to it’s own members and customers, and that it is not making deals specifically to harm other health insurance company’s plans. This lawsuit has yet to be heard by a judge.
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