The Settlement of the Blue Cross Blue Shield Antitrust Litigation

Abstract

ImportanceThe recent settlement of the class action antitrust lawsuit against the Blue Cross Blue Shield (BCBS) Association and 34 plans will bring substantial change to insurance markets in the US; however, not enough is known about the implications for insurance markets and health policy.ObjectiveTo detail the nature of the antitrust claims against the BCBS plans and their Association, and the required changes in their business practices that are a critical part of the settlement.Evidence ReviewThis analysis relies on the court documents that will set the new parameters under which BCBS plans must operate.FindingsFor many of the past 70 years, BCBS plans have enjoyed substantial market power in the state in which each operates. Other BCBS plans were not allowed to compete against other “Blues” plans, and any corporation resident in a plan’s territory was allowed to deal solely with the local plan if the corporation sought BCBS insurance for its employees. The settlement recognizes that these restrictions reduced competition; therefore, they are not allowed under federal antitrust laws going forward. The BCBS Association also will have less control over mergers and acquisitions by individual BCBS plans. Finally, the BCBS plans and the Association must pay $2.67 billion in damages to clients.Conclusions and RelevanceThese findings suggest that BCBS plans will face competition from their fellow plans for business, and they will be allowed to diversify the services they provide. These changes will be likely to threaten the smaller BCBS plans and could bring consolidation to the health insurance industry. These changes should also promote sharper efforts toward health care cost management, with broad implications for other parts of the health insurance industry, and for hospitals and other health care services.