Blue Cross and Blue Shield of Vermont is about to be swallowed whole by one of its much larger cousins. The deal seems benign and, since it holds out the promise of lower costs for health insurance, it’s virtually certain to go through.
The unintended consequences will come later. As will the intended consequences.
The proposed deal, first announced in May, is on a fast track to approval. The state Department of Financial Regulation set aside a two-week window for public comment, which closes the day after tomorrow. Next week, the DFR will hold a public hearing. After that, approval seems a certainty. The two partners have said they want to finalize the arrangement by October 1.
The deal involves BCBSVT, which I will call “Vermont Blue” for clarity’s sake, becoming “affiliated” with Blue Cross Blue Shield of Michigan, or “Michigan Blue.” And despite the seemingly collegial tone of “affiliation,” it’s a takeover. Like a shark devouring a tasty fish.
Or, to change midstream to a different animal analogy, Michigan Blue is the dog and Vermont Blue will be the tail. Michigan Blue insures more than five million people; Vermont Blue, at 200,000, will effectively be a rounding error on Michigan Blue’s bottom line.
My ears perked when I read about the deal because I’m from Michigan, and Michigan Blue has a well-earned reputation as one of the more, ahem, entrepreneurial of the various Blues. Depending on who you ask, it has a habit of either (a) stepping very close to the line or (b) just stomping all over it whenever there’s an advantage to be gained.
Take, for example, a lawsuit filed by the federal government in 2010 accusing Michigan Blue of price-fixing via “most favored nation” agreements, in which the insurer offered higher reimbursement rates to hospitals that agreed not to offer lower rates to any other insurers. The suit dragged on for years before Michigan Blue settled for a paltry $30 million. During that time, the state of Michigan adopted a law banning the “most favored nation” practice.
Other cases. A suit filed by four addiction treatment facilities over “unjustified nonpayments” and “a high number of claims denials for substance use treatment.” A suit by Ford Motor Company against the entire Blue network including Michigan Blue over price-gouging and profiteering. A suit filed by a Native American tribe alleging that Michigan Blue had mismanaged tribal health plans.
Or how about Michigan Blue’s generous support of Republican officeholders who believe the 2020 election was rigged and Donald Trump is the rightful president? Yeah, Michigan Blue tends to act like a for-profit corporation focused solely on the bottom line than like the high-minded nonprofit it supposedly is.
Well, Vermont, this is your new health insurance overlord. Vermont Blue will benefit from access to Michigan Blue’s superior systems and technology, but here’s the real question: What’s in it for Michigan Blue?
I suspect this is a relatively minor move in a larger game, in which Michigan Blue assumes control of other Blues in order to reap efficiencies of scale. What will be lost is any fealty to Vermont’s own interests.
Vermont Blue’s CEO will report to second-tier executives at Michigan Blue. The Vermont Blue board will include five members named by Michigan Blue plus seven Vermont members whose nominations will be subject to Michigan Blue approval.
Affiliation be damned, it’s a takeover. The short-term gain will be cost savings, which everyone is desperate for in health care. But when the real decisions are being made in Michigan by a very aggressive and much larger Blue Cross organization, we may not care for the consequences. And our only recourse will be feeble protest.
The Vermont Political Observer. 
Have you delved into CVS’ recent acquisition of Aetna healthcare? The merger will impact VT prescribers and their patients.
John, you as a self-proclaimed liberal seem to be in love with Big Government (like Vermont Socialism and Progressivism and at the national level too) but not Big Business. You know what? Both can be really bad, uncaring, and tyrannical. I subscribe to the principle of subsidiarity, which means (at least to my understanding) that things are best legislated and carried out on the local level as much as possible. Or, keep it smaller and closer to home, where you can hold people accountable. If you as a liberal love the socialism in Big Government, you should also understand why you lack moral authority to critique Big Business. Both are not good for the little guy. By the way, I do agree with you that this merger sounds bad for Vermont.
There is no logical connection between Big Government and Big Business except the word “Big.”
No connection?? John, surely you jest. Just take a look at the global elites and their international conferences. Many of them are Big Business billionaires who also want to expand Big Government on a global scale so they can consolidate both money and power into their hands. We need to get rid of our smaller family cars that use fossil fuels while they fly in private jets that use tons of fossil fuels, and drive large luxury cars. They dine on high end meat while they talk about us getting rid of our cows and eating insects. Wake up, sir.
“Big Government and Big Business”
Big business is a government, a separate government if you will. They are unelected by us, don’t have to run for re-elections, and govern, through the power of making us subservient to their interests, the lives of thousands, if not hundreds of thousands or millions, of people. “Big Business” is relatively unaccountable to any of us except a relatively few in boards of directors or shareholders.
“If you as a liberal love the socialism in Big Government, you should also understand why you lack moral authority to critique Big Business.”
It’s always hilarious to me that those criticize socialism do so on platforms created by socialism, such as the Internet, until big business got into it and started ripping u off for “the right” to something we paid for collectively — i.e. socialism.
I also agree that this merger is bad for Vt. Let’s watch our prices rise even higher now when this Michigan thugs in suits put the screws to us
Fubar, the internet was not created by socialism. It was originally created by the U.S. military decades ago.