Why North Carolina should hit pause on Blue Cross Blue Shield conversion

Published May 25, 2023

By Chris Deacon

Editor's note: Chris Deacon, JD, Former Director State Health Benefits, Deputy Attorney General and Governor's Counsel in New Jersey

Blue Cross Blue Shield (BCBS) entities like BCBS North Carolina have played a crucial role in providing affordable and accessible healthcare coverage to millions of Americans for decades.  While this may be true historically, more and more frequently these organizations are seeking to shed their not-for-profit shells and operate fully in the open as for-profit holding companies without any oversight or meaningful return of the charitable assets they hold on behalf of the public they have served. 

Recent proposals to allow BCBS North Carolina to convert to for-profit or not-for-profit holding companies that can hold for profit entities have raised concerns about the potential consequences. Not only would such a conversion be detrimental to the public good, it will absolutely continue to undermine the core values and mission of our healthcare system at large.  This also poses a grave risk to the affordability and quality of healthcare services for North Carolinians.

Brief history of BCBS:  BCBS entities were originally established as not-for-profit organizations with a primary objective to serve the public interest and finance the healthcare system, especially hospitals, with the first Blue Cross plans. Their mission has historically been to provide affordable healthcare coverage and improve the health outcomes of their members.  While these types of mission statements and core values continue to appear on their websites, increasingly these organizations have moved further away from their core values and towards profit-seeking motives, regardless of their corporate status.   By converting to for-profit entities, we are condoning this shift of focus from serving the public good to generating profits for shareholders. This change in orientation will absolutely have significant negative consequences for policyholders, the broader community, patients and the State of North Carolina.

While one of the key strengths of BCBS entities has been their commitment to keeping healthcare affordable and accessible, increasingly we see that this commitment has not been kept by these organizations as they continue to profit from the overall increasing cost of healthcare. The days of the social mandate to reinvest surpluses to expand coverage and improve healthcare services are long gone, and the days of perverse incentives caused by mis-guided medical loss ratio policies and unchecked conflicts of interest abound.

We know that allowing these types of unchecked conversions will lead to the prioritization of profit maximization over the affordability of premiums and affordable care. The pursuit of profits by for-profit entities may also lead them to compromise the quality of care because of cost-cutting measures and the prioritization on of profit driven decisions that put short term gains over long term patient outcomes. Cost-cutting measures and profit-driven decisions could prioritize short-term gains over long-term patient outcomes, resulting in a decline in the quality and effectiveness of healthcare services.

Public trust is already at an all-time low when it comes to our healthcare system; is removing regulatory oversight, financial and operational disclosures, and other measures required of these entities going to do anything but erode that trust further?   

The American healthcare system is currently facing an existential crisis, marked by a profound lack of trust among the public. Years of escalating costs, bureaucratic complexities, and a widening gap in accessibility have eroded the faith of many individuals in the system's ability to meet their healthcare needs. This crisis of trust underscores the urgent need for comprehensive reforms that prioritize affordability, transparency, and patient-centered care, ultimately restoring faith in the American healthcare system.  Allowing BCBS of North Carolina to convert hundreds of millions, possibly billions, of dollars worth of charitable assets without so much as an open and honest debate and meaningful review by regulating entities and the public is unacceptable.