Most of the time these days, we worry about fishy mail of the electronic kind. But there is a piece of physical mail many people are now getting that looks like a scam but is legit. Don’t toss it too quickly.
Last October, the Blue Cross Blue Shield Association (BSBSA) agreed to a $2.7 billion antitrust settlement and those potentially impacted are starting to receive notices about how to file for their share. Before we get to what in this settlement might really matter, let’s do some simple math in case you got a card and think you are about to buy a load Dogecoin stock and retire.
The $2.7 will quickly drop to about $1.9 billion after lawyers (everyone is after the lawyers) and administrative fees. Then this settlement covers about 12 years and the 35 independent companies that make up the BCBSA collectively cover about 100 million Americans. That means your payment might cover a cup of coffee, and I mean a real cup of coffee, not one of those $7 Starbucks drinks that have 28 words in the name.
$2.7 billion sounds like a big number and makes for a good headline. Does this really matter, especially when the cost is amortized over that much time and that many organizations? The settlement dollars? No, that doesn’t matter a lick.
But something else happened this week related to the settlement that just might.
The BCBSA companies have historically been ‘independent’ in only a laughable use of the term. The group is clubbier than the NFL owners meeting. By joining the BSBCA, each of the 35 companies got exclusive rights to use the Blues-branded business in their territories.
‘You independently dominate over there, and I will independently dominate over here. See? We are not the evil UnitedHealthcare.’
Humans being humans, over time, the self-interest of the 35 companies has threatened the club.
Some have gobbled up others. Anthem is the bully with 40 million of that total 100 million covered lives.
And several have launched lines of business NOT carrying the Blues brand as way to steal some growth outside their BSBCA territories. To prevent total cannibalization, the Association had a rule that at least two-thirds of each company’s revenue had to come from Blues-branded business. That is what changed this week that might matter in the long run.
As part of the settlement, the Association dropped the two-thirds rule. Theoretically, and hopefully, that means these companies will increasingly compete across markets. As many have a very dominant position in their markets that allows them to dictate pricing both upstream to employers and individuals, and downstream to providers, any additional competition is welcome.
The move is based on the premise that greed will trump group affiliation as a driving motive. A few millennia of human history give optimism to that idea. We shall see.
Note, a major provider class action suit against the Blues is still alive, one that could have a real financial bite. Keep watching that one.