Hospital Service Corporations
This week, House lawmakers passed HB 346: Reorganization & Economic Development Act, which would allow hospital service corporations to restructure their corporate models so that they are controlled by a non-profit holding corporation. The bill would enable hospital service corporations to create a non-profit holding company that would become the parent the company and any of its current and future subsidiaries. Currently, there are only two hospital service corporations operating in North Carolina, Blue Cross Blue Shield and Delta Dental.
The House bill has garnered significant support with 56 sponsors, including Majority Leader Representative John Bell (R-Wayne) and Democratic Leader Representative Robert Reives (D-Chatham). A companion bill has also been filed in the Senate, with 36 state senators out of 50 sponsoring it.
Despite a long list of bipartisan bill cosponsors, lawmakers on both sides of the aisle and Republican Commissioner of Insurance Mike Causey have voiced concerns with the bill. The provisions in the bill that would allow hospital service corporations, like Blue Cross Blue Shield, to move surplus dollars into a new holding company have raised alarms as it could be used to buy healthcare companies and other subsidiaries or make investments that some argue are subject to far less regulatory oversight than the non-profit insurer currently receives.
Commissioner Causey held a press conference on Monday to voice his opposition to the bill, stating that "this legislation is missing many provisions that are necessary to protect the people, the policyholders." Commissioner Causey also highlighted the lack of meaningful review of reorganization.
Representative Donny Lambeth (R-Forsyth), a former hospital administrator and chairman of the House Health Committee, initially expressed skepticism about the objectives of the bill. But on Thursday, during the floor vote on the bill, Rep. Lambeth told his fellow House members that although he had been a critic of the intent behind the bill, specifically that of Blue Cross Blue Shield, he believed that the restructuring could create the potential for a reduction in cost. Rep. Lambeth also disagreed with critics who asserted that the bill would raise premiums for policyholders, stating that he did not believe it would cause premiums to go up more than they are already going to.
The bill passed 86-26, with members of both parties voting in favor of the bill, and against it. HB 346 now heads to the Senate.