Federal lawsuit against BCBSM illustrates Obamacare’s hypocrisy

The new federal health care legislation promotes consolidation among providers and insurers, yet its advocates touted their desire to reduce costs.

DOJ says BCBSM’s use of MFNs has reduced competition in the sale of health insurance in markets throughout Michigan by inhibiting hospitals from negotiating competitive contracts with Blue Cross competitors. The MFNs have harmed competition by reducing the ability of other health insurers to compete with Blue Cross, or actually excluding Blue Cross’ competitors in certain markets, and raising prices paid by Blue Cross competitors and by self-insured employers.

However, John R. Graham, director of health care studies at the Pacific Research Institute in San Francisco, says “this case demonstrates the absurdity of federal antitrust: The law proposes to punish one competitor for having the most market share.”

Graham acknowledges that the advantage BCBSM has in the state may derive from the tax breaks the state gives it in exchange for being Michigan’s insurer of last resort. BCBSM guarantees insurance coverage to everyone and therefore enjoys nonprofit status. Michigan is one of only two states that has such an arrangement.

But Graham contends that “if Michigan BCBS has a high market share because of malformed state policy, then the state of Michigan should address this.”

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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