North Carolina Insurance Department Launches Blue Cross Probe
Feb. 11--RALEIGH -- N.C. Insurance Commissioner Wayne Goodwin said Thursday his agency has launched an examination of Blue Cross and Blue Shield to determine the cause of ongoing technology problems that have prevented thousands from buying or verifying health insurance this year.
Goodwin said the examination of the state's largest health insurer will likely take months, and Blue Cross would be billed for any complex investigative work outsourced to specialists. He said his agency has received more than 1,000 formal complaints about Blue Cross in the past month and well over 4,000 customer calls.
"We're at that point where it is what I need to do," Goodwin said. "This is akin to a deep dive audit where we determine what worked, what didn't work, whether any laws were broken, and how the process can be improved."
Goodwin announced the probe in a discussion with members of The News & Observer editorial board and editors about challenges facing North Carolina's insurance market.
Blue Cross said it would cooperate with the agency's audit.
"We apologize for the frustration this has caused and will work with the Department throughout its review," the insurer said in a statement. "Though the majority of issues that many of our members have faced have been resolved, some work remains. We will continue working hard to address our customers' concerns and deliver the level of service they expect."
Customer complaints at Blue Cross have tapered off since the Affordable Care Act's open enrollment closed Jan. 31, slowing the stream of new applicants to a trickle of people who qualify for special enrollments. The Chapel Hill insurer experienced a massive software failure in January when it attempted to transfer about 400,000 individual customers from a legacy software to a new platform called Facets, prompting a flood of calls that kept customers on hold for hours.
The insurer has focused on reducing its backlog of applications, but continues experiencing problems with billing and invoicing.
Goodwin, a Democrat up for reelection this fall, also stressed that he continues to support the the Affordable Care Act, even though the federal insurance law is contributing to financial losses to insurers around the country. The ACA has been a heated election issue in recent elections, as well as in Congress, where Republicans have tried to repeal the law at least 60 times.
Dallas Woodhouse, the leader of North Carolina's Republican Party, predicted that the ACA's mounting problems here and around the country would end Goodwin's career as an elected official. Woodhouse also said the ACA would doom the political aspirations of state Attorney General Roy Cooper, the Democratic gubernatorial candidate.
"Wayne Goodwin -- along with Roy Cooper -- is simply trying to save face, pass blame and cover his tracks after his steadfast support for the disastrous ObamaCare plan and roll out in North Carolina," Woodhouse said in astatement. "But now with skyrocketing premiums and Blue Cross recently announcing it will probably have to leave the marketplace due to ObamaCare, Goodwin and Cooper will have to face the music from voters come November."
Goodwin blamed Republicans for the law's failures. He said the insurance law has significantly reduced the rolls of the uninsured and would have been even more effective if North Carolina had expanded Medicaid to divert the sickest residents from the private insurance market.
Goodwin said the insurance market here would also be stronger if North Carolina had created a state-run insurance exchange. A state-run exchange would have allowed Goodwin to hold public hearings on rate increases, given him greater negotiating leverage, and allowed the state to seek waivers to customize the law here.
Most importantly, Goodwin said, a state exchange would have resulted in more health insurers selling ACA policies in the state.
"The incentive for carriers to write ACA coverage was decimated," Goodwin said.
Goodwin characterized Republican-led opposition to the federal law as political "obstructionism," but also suggested that optimism for the ACA should be tempered by reality.
"I am a strong proponent of the ACA but want to make it better," Goodwin said. "Anyone who says the ACA is perfect is not paying attention."
Blue Cross lost $123 million on the ACA market here in 2014, for an overall operating loss of $50.6 million, and expects to announce another loss in the coming weeks for 2015. The federal law, which prohibits insurers from rejecting customers for poor health, is attracting applicants who were considered uninsurable in past years.
Blue Cross CEO Brad Wilson warned this week that the company may be forced to withdraw from the ACA market in North Carolina if it continues losing money on ACA customers and is blocked from raising rates to cover expenses.
In 2014, Wilson said, 5 percent of Blue Cross's ACA customers accounted for $830 million in medical claims, but those customers paid just $75 million in premiums to the company. The picture in 2015 is shaping up similarly, Wilson said.
John Murawski: 919-829-8932, @johnmurawski
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