News Ticker

NC Consumer Advocates Seeing Red Over Bait and Switch by One of the Blues

Wendell Potter: Former insurance company executive; author – Posted: February 23, 2011 08:38 AM

RALEIGH, N.C. — Health insurers are demonstrating once again — this time in state capitals — that they cannot be trusted to do the right thing for consumers when health care reform is up for debate.

President Obama and Congressional leaders learned the hard way that insurance executives were playing them like a Stradivarius in promising to be good-faith partners on reform. In the end, though, the politicians realized that insurers had been carrying out a duplicitous PR strategy from the start. Even as the firms pledged at a March 2009 White House summit to help enact reform, they already were using millions in policyholder premium dollars to conduct a scare campaign against many of the key reform proposals supported by the Democrats.

The latest evidence of their duplicity can be found in Raleigh, where state lawmakers will vote in coming weeks on legislation to create a health insurance exchange, as required by federal law.

The law directs states to have exchanges up and running by January 1, 2014, and it encourages states to establish exchanges that, as the National Academy of Social Insurance has noted, “will promote effective competition for health insurance and offer a wide selection of coverage options to individuals and businesses.

Here in Raleigh, Blue Cross Blue Shield of North Carolina (BCBSNC) — by far the state’s biggest insurer — has helped draft a bill that would give the firm power to do the exact opposite of what Congress intended. If enacted, the bill would actually enable BCBSNC to control the exchange’s ruling body, which could lead to a further reduction in competition and an undermining of efforts to help consumers make prudent choices when buying coverage.

It’s a brazen power grab, but BCBSNC is so big and influential that consumer advocates worry that the bill will become law, making the exchange a vehicle for the insurer to increase its already formidable market share and lure more people into highly profitable but often inadequate benefit plans.

In recent years, one or two insurers have become so dominant in most states that other carriers find it almost impossible to establish much of a presence. That is especially true in North Carolina, where in 2009 BCBSNC took in 71.3 percent of all dollars spent on health insurance premiums, according to the North Carolina Department of Insurance. As recently as 2003, BCBSNC’s market share was just about 60 percent.

Insurers that enjoy such dominance worry that an exchange they can’t control would enable competitors to get a foothold and grow — at their expense. And that’s why BCBSNC persuaded a Republican legislator to quietly introduce a bill in the GOP-controlled House that would pack the exchange board in the insurer’s favor.

Consumer advocates say they had previously been lulled into thinking that BCBSNC could be trusted because the insurer participated — seemingly as a good-faith partner — in a broad process to craft a consensus exchange bill to present to lawmakers this year.

The work was part of a broader effort led by the North Carolina Institute of Medicine, an independent, quasi-state agency established by the legislature in 1983 “to provide balanced, nonpartisan information on issues of relevance to the health of North Carolina’s population.” Soon after President Obama signed the Affordable Care Act last year, the IOM convened several stakeholder groups–including insurance companies, doctors, hospitals and consumers — to consider how best to implement reform in the Tar Heel State.

The IOM group tasked with crafting policies and procedures for the state’s exchange spent months negotiating and drafting recommendations to present to the General Assembly. According to Adam Linker of the North Carolina Justice Center, a progressive advocacy and research organization that participated in the IOM work, BSBCNC made several suggestions, the majority of which were adopted by the group.

“Consumer groups worked hard to write exchange recommendations that insurance companies could accept,” Linker said.

Last week, consumer advocates discovered that BCBSNC executives had been working behind the scenes all along on their own exchange bill, which was introduced without advance warning by the chair of the House Insurance Committee, Jerry Dockham. Until recently, Dockham earned a living, aside from what he makes as a legislator, by running an insurance agency.

In BCBSNC’s bill, many of the consumer protections the various stakeholder groups had agreed to were nowhere to be found. For example, the exchange would not be allowed to limit the choices of health benefit plans to those that provide solid value to consumers. All plans, regardless of how inadequate they might be, would have to be offered. Also, no standardization would be allowed, meaning that consumers would not be able to get the information they need to make apples-to-apples comparisons between plans.

Among the objectives of reform was to require transparency about how insurers operate, and to provide essential information in a format that would allow consumers to make informed choices. The BCBSNC’s bill essentially would create little more than an Internet-based platform where the insurer could market and sell its policies — rather than a real exchange that would allow consumers to make meaningful comparisons among competitor policies.

Perhaps most audacious was how the bill essentially gave control of the exchange board — and, by extension, to the state’s whole insurance marketplace — to BCBSNC. Forever. While some states, such as California and Massachusetts, have purposely excluded insurance companies from serving on such boards because of conflict of interest concerns, BCBSNC would have a permanent seat on a proposed 11-member exchange board in North Carolina.

The board would also include an insurance agent (someone like Dockham) and representatives of two of the insurance industry’s most reliable allies: the Chamber of Commerce and the National Federation of Independent Business. (Last year, the insurance industry funneled $86 million to the U.S. Chamber of Commerce to help finance an advertising and PR campaign opposing reform ideas the industry didn’t like, such as establishing a public option that would compete with private insurers.)

In addition to the Blue Cross seat, executives of two smaller insurers would serve three-year terms on the board. The state hospital association and the state medical association would also have seats. The panel would additionally include an economist. Consumer groups would have two board seats.

Rep. Verla Insko, a Democrat, has proposed an alternate bill with a board that would have eight members, none of whom would be representatives of the insurance industry. Two members would represent employers and two would represent the general public. The four others would be individuals with expertise in information technology, health economics, actuarial science and health policy analysis or law.

Insko’s bill also contains a section on ethics. One provision states that “each member of the board shall comply with all conflict of interest rules and recusal procedures set forth in the Plan of Operation.” The BCBSNC bill has no such language.

So far, BCBSNC has not commented officially on the legislation. Lew Borman, a spokesman for the company, told me the insurer does not have an official statement on either bill. “Our view is that the conversation is just beginning,” he said, adding, however, that the company felt it was appropriate for it to have a seat on the board “because of our expertise.”

The consumer advocates, meanwhile, are upset and, frankly, embarrassed that they proved so gullible.

“I can’t overemphasize how hard consumers worked to get agreement from Blue Cross,” said Linker. “We put our reputations on the line. We spent hours in negotiations. But Blue Cross betrayed the process and betrayed us by filing a radically anti-consumer bill. They promised that even if they disagreed with us on an issue they would keep us informed of what they were doing. Obviously, we were duped.”

The embarrassment at being taken has fired up the consumer advocates, who have pledged to fight the BCBSNC’s legislation and support the bill introduced by Insko, who is hoping that a few Republicans will sign on as co-sponsors when they find out what BCBSNC’s real motives are.

The American Cancer Society and the American Heart Association laid out their objections to the BCBSNC’s bill in a letter to the IOM, the state insurance commissioner and state legislators.

“We will be working diligently against Blue Cross’ attempt to monopolize North Carolina,” American Cancer Society lobbyist Christine Weason told me. “The thought of allowing the insurance industry the opportunity to create a system to which they will enjoy billions of dollars in profit is shocking and sets a dangerous precedent.”

Weason said the American Cancer Society believes the composition of the exchange board is key to how the Affordable Care Act is implemented in North Carolina.

“This provision marks the crux by which all other implementation language will be measured,” she said.

“At this monumental moment, all individuals have the opportunity — perhaps for the first time — for affordable and accessible health care… The Affordable Care Act takes the first step to level the playing field, and it allows folks the opportunity to save their lives, not spend their life savings, in seeking the medical treatment they desperately need. We are not going to let Blue Cross, or any insurer for that matter, keep us from achieving that goal.”

(This also was published by the Center for Public Integrity at

About tenthltr2u (1074 Articles)
A child of the 60's I often feel out of place in the world as it exist today. Too much excess, too much materialism, too few people who genuinely care or give a damn. It is only with the heart that one can see rightly; what is essential is invisible to the eye. Antoine de Saint-Exupery

2 Comments on NC Consumer Advocates Seeing Red Over Bait and Switch by One of the Blues

  1. REALITY!!

    ( Gov. Peter Shumlin: Real Healthcare reform — )

    ( Health Care Budget Deficit Calculator — )

    ( Briefing: Dean Baker on Boosting the Economy by Saving Healthcare )


    As you all know. Had congress passed a single-payer or government-run robust Public Option CHOICE! available to everyone on day one, our economy and jobs would have taken off like a rocket. And still will. Single-payer would be best. But a government-run robust Public Option CHOICE! that can lead to a single-payer system is the least you can accept. It’s not about competing with for-profit healthcare and for-profit health insurance. It’s about replacing it with Universal Healthcare Assurance. Everyone knows this now.

    The message from the midterm elections is clear. The American people want real healthcare reform. They want that individual mandate requiring them to buy private health insurance abolished. And they want a government-run robust public option CHOICE! available to everyone on day one. And they want it now.

    They want Drug re-importation, and abolishment, or strong restrictions on patents for biologic and prescription drugs. And government controlled and negotiated drug and medical cost. They want back control of their healthcare system from the Medical Industrial Complex. And they want it NOW!


    For profit health insurance is extremely unethical, and morally repugnant. It’s as morally repugnant as slavery was. And few if any decent Americans are going to allow them-self to be compelled to support such an unethical and immoral crime against humanity.

    This is a matter of National and Global security. There can be NO MORE EXCUSES.

    Further, we want that corrupt, undemocratic filibuster abolished. Whats the point of an election if one corrupt member of congress can block the will of the people, and any legislation the majority wants. And do it in secret. Give me a break people.

    Also, unemployment healthcare benefits are critically needed. But they should be provided through the Medicare program at cost, less the 65% government premium subsidy provided now to private for profit health insurance.

    Congress should stop wasting hundreds of millions of dollars of taxpayer money on private for profit health insurance subsidies. Subsidies that cost the taxpayer 10x as much or more than Medicare does. Private for profit health insurance plans cost more. But provide dangerous and poorer quality patient care.



    This is what the American people are shouting at you. Both parties have just enough power now to do what the American people want. GET! IT! DONE! NOW!

    If congress does not abolish the individual mandate. And establish a government-run public option CHOICE! before the end of 2011. EVERY! member of congress up for reelection in 2012 will face strong progressive pro public option, and anti-individual mandate replacement candidates.

    Strong progressive pro “PUBLIC OPTION” CHOICE! and anti-individual mandate volunteer candidates should begin now. And start the process of replacing any and all members of congress that obstruct, or fail to add a government-run robust PUBLIC OPTION CHOICE! before the end of 2011.

    We need two or three very strong progressive volunteer candidates for every member of congress that will be up for reelection in 2012. You should be fully prepared to politically EVISCERATE EVERY INCUMBENT that fails or obstructs “THE PUBLIC OPTION”. And you should be willing to step aside and support the strongest pro “PUBLIC OPTION” candidate if the need arises.

    ASSUME CONGRESS WILL FAIL and SELLOUT again. So start preparing now to CUT THEIR POLITICAL THROATS. You can always step aside if they succeed. But only if they succeed. We didn’t have much time to prepare before these midterm elections. So the American people had to use a political shotgun approach. But by 2012 you will have a scalpel.

    Congress you could have pass a robust government-run public option during your lame duck session. You knew what the American people wanted. You already had several bills on record. And the house had already passed a public option. Departing members could have left with a truly great accomplishment. And the rest of you could have solidified your job before the 2012 elections.

    President Obama, you promised the American people a strong public option available to everyone. And the American people overwhelmingly supported you for it. Maybe it just wasn’t possible before. But it is now.

    Knock heads. Threaten people. Or do whatever you have to. We will support you. But get us that robust public option CHOICE! available to everyone on day one before the end of 2011. Or We The People Of The United States will make this midterm election look like a cake walk in 2012. And it will include you.

    We still have a healthcare crisis in America. With hundreds of thousands dieing needlessly every year in America. And a for profit medical industrial complex that threatens the security and health of the entire world. They have already attacked the world with H1N1 killing thousands, and injuring millions. And more attacks are planned for profit, and to feed their greed.

    Spread the word people.

    Progressives, prepare the American peoples scalpels. It’s time to remove some politically diseased tissues.

    God Bless You my fellow human beings. I’m proud to be one of you. You did good.

    See you on the battle field.


    jacksmith – WorkingClass 🙂


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