GOP Rep. John Bradford and House Democratic leader Robert Reives are advancing the legislation.

April 26. By Lynn Bonner/NC Newsline. A controversial bill allowing the state’s dominant nonprofit health insurer to act more like a for-profit company pushed through a House committee Tuesday after an abbreviated discussion and a divided vote.

The bill would allow the nonprofit, Blue Cross Blue Shield of North Carolina, to create a holding company that could use insurance company assets to buy other businesses without having to win approval from state regulators.

House Bill 346 has drawn bipartisan supporters and opponents. Republican Rep. John Bradford of Mecklenburg has taken charge of moving the bill through his chamber. Blue Cross needs to move with the ease and speed of for-profits such as Aetna and UnitedHealthcare, he told the committee. Blue Cross “is a business trying to compete in a highly competitive, rapidly changing industry,” the Cornelius resident said.

Part of his argument Tuesday rested on economic development — that allowing Blue Cross to act more like a for-profit company will mean that it can increase its workforce. House Democratic leader Robert Reives, one of the bill’s co-sponsors, stood with Bradford during the committee debate.

Republican Insurance Commissioner Mike Causey has been the bill’s most outspoken opponent. The bill is good for Blue Cross, Causey said, but not the 4.3 million policyholders who would see their premiums increase if the company is able to use their money to invest as if it were a for-profit company.

“I’ve not seen a single person that says this is good for the consumer,” Causey said Tuesday. He held a press conference Monday to denounce the bill. One of the leaders of the House Health Committee, Rep. Donna White, a Johnston County Republican, attended and expressed reservations.

The bill has huge implications for the state, but the time for public debate was held to 10 minutes Tuesday. Bradford did not have enough time to explain the bill in its entirety before Causey was asked to comment.

A mix

The bill moved out of committee with a mix of yes and no voice votes. No member asked for a vote count.

Sixty members of the 120-member House have signed on to the bill. Thirty of 50 senators have signed on to the Senate companion bill.

Changes will be made to the bill in an attempt to satisfy the NC Medical Society — the state’s association for doctors — before it hits the House Insurance Committee on Wednesday, Bradford said.

Since it was first presented last month, the bill’s supporters made changes to the bill in an attempt to satisfy Causey’s concerns. But Causey said at his news conference that those changes weren’t enough.

Under the bill, when the company applies to reorganize, the state Insurance Commissioner would have 30 days to approve it. A change from an earlier version would allow the commissioner to hire advisors at company expense to review the material.

Martin Eakes is CEO of Self-Help Credit Union and the Center for Responsible Lending and one of the bill’s opponents. Thirty days would not give a commissioner enough time to review the application, so the ability to hire advisors wouldn’t matter, he said.

A critique of the amended bill prepared by a former Insurance Department employee who worked for late Commissioner Jim Long says that it would not allow the commissioner to consider the impact of reorganization on policyholder premiums or the broader public interest.

In New Jersey

Blue Cross affiliates in other states have reorganized to allow for new investments. New Jersey approved a reorganization for Horizon Blue Cross Blue Shield of New Jersey last November.

According to a New Jersey Department of Banking and Insurance news release, that state’s law required officials to consider the interests of policyholders and whether the reorganization would “be detrimental to the safety and soundness” of the insurance company, subsidiaries, or the holding company. The state held public hearings and solicited public comments on the application. Its approval came with 11 conditions.

Eakes said New Jersey officials had more than 30 days to review that application.

The North Carolina bill says the new holding corporations should “contribute to the health needs of customers, subscribers, or the people of this State, including those in rural communities of this State, or promote affordability, access, better health, or customer experience.”

A critique of the bill says it would not prevent Blue Cross from investing in companies outside North Carolina, and as the bill is written, the customers and subscribers can include people living outside the state.

Under a 1998 conversion law, Blue Cross would have to put 100% of its fair market value into a charitable foundation “for the promotion of social welfare” if it should ever become a for-profit company.

Blue Cross has said it has no interest in becoming for-profit.

Critics said the bill would allow Blue Cross to be treated as a for-profit company without having to formally convert and contribute to the foundation.

— NC Newsline is a Raleigh-based nonpartisan, nonprofit newsroom