Blue Cross Health Insurance Companies Must Now Compete...Second BlueBid Explained

Hello, this is Dr. Eric Bricker and thank you for watching A Health Care Z. Today's topic is Blue Cross plans must now compete with each other. Second blue bid explained. So, as I have said on a previous A Health Care Z video, Blue Cross is not one company, it's actually 36 different companies that are part of the Blue Cross Blue Shield Association. Now, collectively they cover 109 million Americans. It's like almost a third of Americans. And they range from like the largest publicly traded Blue Cross plan, which is Elevance or Anthem as they used to be called. There are 14 different state Blue Cross plans that make up Anthem. There's also HCSC, Health Care Services Corporation, which is five state Blue Cross plans, Illinois, Texas, and three other states. There's also Blue Cross plans that have the actual name of the state, like Blue Cross of Alabama, Blue Cross of South Carolina, Blue Cross of North Carolina. There's also Blue Cross plans that have like different names, but they're for the state. So like Wellmark is for the state of Iowa. And then Highmark is in Western Pennsylvania and Delaware and West Virginia and parts of Western New York. Then there's CareFirst, which does like Washington, D.C. and parts of Maryland and parts of Virginia. And then there's Capital Blue Cross, which is not for the nation's capital. It's for parts of Pennsylvania. So it's incredibly confusing. But there's 36 different Blue Cross plans that are separate companies that have essentially divided up the country. And they have agreed with each other to provide geographic monopolies for each other. What do I mean by that? If an employer is in Illinois and they want to be on Blue Cross, their only choice is Blue Cross of Illinois. They can't use another Blue Cross plan in another state. However, the different Blue Cross plans have agreed to share their network with each other in a program called the Blue Card program. So if that employer that's headquartered in Illinois has employees in North Carolina, well, then the employees in North Carolina can access the Blue Cross discounts and network that Blue Cross of North Carolina has negotiated, even though they're on Blue Cross of Illinois because their headquarters is in Illinois. And so the employers in America were like, hmm, well, what if I don't like my own state's Blue Cross plan? What if they're not giving me good service? Well, I want to stay on the Blue Cross plan. Guess what? I have no choice. If I want to stay on the Blue Cross network, I have to use my own state's Blue Cross plan. And employers in America said, I don't like that. So they sued. So multiple employers in America got together and they did a private class action lawsuit against the Blue Cross Blue Shield Association. This started all the way back with the initial judgment back in 2018. And then sort of the final judgment was in 2022. And of course, the Blue Cross Blue Shield Association and all the plans, they didn't like all this class action lawsuit stuff. And so they appealed. But that appeal was struck down in just January of 2024. And this class action lawsuit essentially said that, look, the Blue Cross plans are violating the Sherman Antitrust Act. They're colluding together. They have formed a cartel where they have prevented each other from competing with each other for employers in the different states. And any time you have capitalism without competition, you end up having harmed customers. The customer loses when there is a lack of competition. And so the customers, the employers, they sued the Blue Cross plans, and they sued for damages. And they were awarded in a settlement $2.67 billion in damages that the Blue Cross plans have to pay the employers and the employees that are on those plans. And, and this is the huge part here, and the settlement provided for what's called injunctive relief. And injunctive relief is when the court or the settlement compels the business to change its practices. So now the Blue Cross Association and all the Blue Cross plans are being compelled to change. And how are they being compelled to change? Well, they now have to compete with each across state lines through a process that's referred to as second Blue Bid. Now this is not available for all employers that use Blue Cross. It's only available for self-funded employers that are using Blue Cross for administrative services only, ASO. And it's only for very large self-funded employers that have more than 5,000 employees, where those employers can request a second competitive bid from another Blue Cross plan. So now if you're an employer in Illinois and you don't like the Illinois Blue Cross plan, you can go out and you can request a bid from another state's Blue Cross plan. And this applies, the fact that it's for self-funded employers and more than 5,000 employees, this actually affects the 33 million Americans, right? So that's like 10% of Americans are now able to have potentially better health insurance because their employer is actually able to have the Blue Cross plans compete with each other. And where there's competition, the customer wins. Okay, so this only applies to individual employers. It does not apply to what are referred to as Taft-Hartley plans, which are the health plans for like labor unions. This doesn't apply to what are referred to as MIWAs, which is an acronym that stands for a Multi-Employer Welfare Arrangement. So that's, again, it's a group of employers. It has to only apply to a single employer. It was just the terms of the suit. Okay, also the fact that it's only for employers with more than 5,000 employees, I mean, that's obviously a round number that was sort of arbitrarily set. In my opinion, that's rather unfair. Okay, so great, you have more competition if you've got 5,000 or more employees, but what if you have 4,999? You totally get the shaft. And so arguably, this number needs to go down so that smaller self-funded employers can also benefit from this. Okay, so the key word here is request. Your existing Blue Cross plan is not going to go out of its way to be like, oh yeah, you can totally get a competitive bid from another Blue Cross plan. No, and your broker consultant may or may not avail you of this information that you can go out and request a second Blue Bid. So you, the employer of your own volition, must go out and request a second Blue Cross bid. Now, you can do it through your broker. You don't literally need to pick up the phone yourself. You can be like, hey, broker consultant, you need to go out and get a second Blue Bid. You as the employer can ask your broker consultant to do that. Now, what I have heard historically from employers that use a variety of Blue Cross plans is that, look, the Blue Cross discounts are great. The fact that they've got this Blue Card-like program so that your employees, no matter where they're located in the country, can access the Blue Cross network, that's great. We love that. However, we don't particularly like our Blue Cross administrator themselves. They provide poor service. I was literally talking to an employer the other day where their own particular Blue Cross plan, they didn't even know which providers had been paid out claims and which providers had not been paid out claims. And they had been having a hard time keeping track of the money. And they couldn't answer the employer's questions of, where's the money? And historically, that employer could complain to that Blue Cross plan, but that Blue Cross can be like, well, what are you going to do? You're going to leave? You can't. But now, with Second Blue Bid, you can. Likewise, I've heard other self-funded employers with Blue Cross be like, look, Blue Cross refuses to give me access to my data. And now, with a Second Blue Bid, you can be like, hey, competing Blue Cross plan, if we switch to you, would you be willing to give us our data? And maybe that Blue Cross would be like, sure, we'd love to give you your data. Aha, competition. Because maybe you could get better service now. Maybe you could get access to your data. Again, historically, when there was a lack of competition among Blue Cross plans, then it promoted bad behavior by the Blue Cross plans through poor service and not giving their customers access to data like would be helpful for them. So now, in this new world, post this settlement, employers can leave their existing Blue Cross plan if there are more than 5,000 employees, and they have more leverage now in negotiation with their current plan. And that, I think, is a real win for employers and employees in America. And that's what I wanted to share with you today. Thank you for watching A Health Care Z.