Blue Cross has come to a tentative $2.7 billion antitrust settlement over claims that the insurance group’s member companies conspired to limit competition and boost policyholders’ prices.
The agreement will curtail the business practices in question in addition to the considerable monetary settlement.
The plaintiffs brought the case against Blue Cross on behalf of more than 1 million individual and corporate policyholders. These policies covered tens of millions of Americans. The suit alleged that the member companies violated the Sherman Act and other antitrust laws by dividing up health insurance markets to avoid competing with each other, among other complaints.
Blue Cross and Blue Shield Association has agreed to the settlement. Still, before final approval of the antitrust settlement, all 36 boards for the Blue Cross Blue Shield insurers must sign off. In addition to the boards, U.S. District Judge R. David Proctor, who is presiding over the case, must also approve the deal.
“We can assure you that Blue Cross and Blue Shield companies will remain committed to improving the health of our members, our customers, and our local communities,” said Blue Cross Blue Shield in a statement.
“There is no settlement until terms have been approved by the parties and the court,” said David Boies, a lead attorney for the plaintiffs.
Boise added that the reported terms “would be a very good result for the parties and the public. It will significantly increase competition in the health insurance market, and provide individuals and companies who purchase health insurance with more choices and lower prices.”
Under the proposed terms of the settlement, Blue Cross insurers, who operate independently from the parent company, would no longer have to adhere to some of the rules established by the association that the plaintiffs in the case claim prevent the companies from engaging in head-to-head competition.
The insurers would no longer have to adhere to the rule limiting the share of each company’s total national revenue from business that isn’t under Blue Cross brands. According to The Wall Street Journal, the change could increase competition among the companies if they choose to expand their non-Blue lines of business in one another’s operation regions.
Additionally, once the settlement is approved, it would loosen a rule limiting the Blue Cross insurers’ ability to compete for large national employers’ business.
“They are removing two of the mechanisms that are pretty flatly anticompetitive,” said Tim Greaney, a professor at the University of California Hastings College of the Law.
Greaney did point out that Blue Cross’ licensing setup, which was the focus of the litigation, would continue to remain in-tact and limit direct competition among the insurers.
The change in rules would significantly benefit larger Blue Cross companies such as Anthem, who would be better positioned to win larger accounts.
Once the settlement is agreed upon, it would bring an end to litigation that has been ongoing since 2012. However, Blue Cross also faces a separate legal challenge from healthcare providers unaffected by this settlement. The remaining suit alleges that the insurers illegally pushed down the payments healthcare providers receive for medical services.