Blue Cross Insurers Attain Tentative Settlement in Antitrust Lawsuit

Blue Cross Insurers Reach Tentative Settlement in Antitrust Lawsuit

The country's plans for the Blue Cross have reached a preliminary settlement of $ 2.7 billion in a federal lawsuit filed by their clients accusing the group of engaging in a conspiracy to prevent competition between the individual companies have, so two people with knowledge of the discussions.

The deal, first reported by the Wall Street Journal, would have to be approved by each of the three dozen Blue Cross insurers that make up the trading group, the Blue Cross Blue Shield Association. Judge R. David Proctor of the US District Court for the Northern District of Alabama, who is overseeing the case in that state, has also yet to approve the proposed settlement.

Under the terms proposed, the Blue Cross plans, which function independently of one another, would no longer have to comply with some of the rules set by the association, which plaintiffs claim prevent companies from entering into direct competition.

"The reported conditions are a very good solution for everyone," said David Boies, one of the leading lawyers representing the plaintiffs in the case. “It will greatly increase competition in the health insurance market, which is obviously a critical market for Americans today. This will result in more competitive offers and lower prices. "

While the dollar amount allegedly reached is substantial, Mr. Boies pointed to the injunction because it greatly intensifies competition between companies that are not vying for the same business. "That can be much more valuable to individuals and companies buying health insurance," he said.

Every third American is covered by a Blue Cross plan, and these plans are often the largest health insurers in their respective state or region. The plans include those operated by for-profit giant Anthem in states like California and New York. Another major operator is Health Care Service Corp., which operates Blue Cross charitable plans in five states, including Illinois and Texas.

The association said it was unable to comment on ongoing litigation, but said, "Blue Cross and Blue Shield companies will continue to work to improve the health of our members and our local communities."

The dominance of these plans in markets with only a handful of major competitors has long raised concerns about a lack of competition that can result in higher prices for both employers and individuals. While federal officials have blocked megamergers between for-profit giants like Anthem with Cigna and Aetna with Humana, the Blue Cross plans adhere to the association's guidelines on how to capitalize on the powerful Blue Cross brand and are accused of engaging in anti-competitive behavior by they essentially divide the health insurance market among themselves.

"These are very significant insurers that have a significant market presence," said Barak Richman, a law and economics professor at Duke University, who noted that the settlement appeared to have reduced the association's ability to restrict competition without going into the basics, however, banning a Blue Cross plan in one state, selling Blue Cross policies in another without permission.

Under the proposed settlement, the plans of national employers would compete for companies to buy health insurance for their employees, often across states. The Blue Cross plans could also compete more aggressively in areas where the Blue Cross name is not used. A plan could therefore offer a health plan under a different name in a state where it is not headquartered.

"Expanding this competition is a good thing," said Richman. What the agreement may not address is the lack of competition within a state, which makes it difficult to tackle new ways of service delivery.

While the proposed settlement would end the lawsuit that began in 2012, the association is also facing a separate legal challenge that remains unaffected by hospitals and doctors. "We are continuing the litigation," said Joe R. Whatley, an attorney who leads the case with vendors.

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