The bill was controversial from the outset. It would allow Blue Cross Blue Shield of North Carolina to abscond away with premium dollars it charged when it had a tax-privileged status. But the bill just passed overwhelmingly in the North Carolina General Assembly— aided and abetted by Republicans who gleefully accept contributions from the same entity. A month ago, Longleaf Politics explained the problem with the bill:
The bill seeks to change how Blue Cross can manage its $4.6 billion — and growing — in reserve cash.
Under the status quo, the company can’t amass much more than that without triggering laws requiring it to cut rates or send refund checks to customers. But Blue Cross wants the ability to use that money to make investments it says will help it better compete with insurance giants like Aetna and UnitedHealthcare…
The company came under the purview of the General Assembly in 1941, and it has remained a nonprofit to this day. This has given it significant tax advantages but also comes with strings attached — like the reserve cap we mentioned earlier…
BCBSNC says it wants to remain a nonprofit. But the company has regularly pushed for more freedom to operate like a for-profit, and this bill is just the latest example.
As a reflection of that, the General Assembly passed a law in 1998 that would require Blue Cross Blue Shield to set aside a giant pot of money — the amount of its market value — into a foundation for public purposes should it convert to a for-profit or otherwise change its structure. It was essentially a “poison pill” to keep Blue Cross a state-focused nonprofit.
This new bill represents a significant reversal in how the General Assembly views Blue Cross Blue Shield of North Carolina. It would essentially allow Blue Cross to circumvent that 1998 law.