If you reneged on a multi-million dollar promise to the state, the full weight of government would come crashing down on your head. But that's not what happening to Blue Shield.
The state said that the insurer agreed to give $14 million annually for 10 years to Blue Shield’s foundation or another charity, in addition to its regular contributions, so that its $1.2-billion acquisition of Medicaid insurer Care1st Health Plan would be approved. But something funny happened after all the ink dried on that deal. Blue Shield said it only had to pay its regular contributions because it totaled over $14 million a year.
An 'outraged' Shelley Rouillard, director of the Department of Managed Health Care (DMHC), which approved the deal, said she was disappointed, but "reasonable people may disagree about the meaning of the language." (OK. Maybe she wasn't that outraged.) We're sure that the DMHC could take Blue Shield to court to force it to follow the agreement.
Except, if you actually read the agreement, it says nothing about giving above and beyond: "For ten years following the close of this transaction, Blue Shield agrees to make annual contributions of not less than $14 million per year to the Blue Shield Foundation..." The state agency whined that it talked about extra funding in negotiations. Of course, the insurer's spokesman told the Los Angeles Times that, "We are honoring the agreement that was negotiated with the state."
Why should we be surprised? We're already written about how Blue Shield lost its tax exemption status because the state's tax board said that the insurer targets profit over public good, and how a settlement between DMHC and the insurer over misrepresenting a policy's network of providers and hospitals didn't adequately reimburse consumers.
We've also written about the Care1st and Blue Shield agreement before, and in retrospective, it's hilarious because the agreement notes that Blue Shield promised not to lie.
"Most of us would assume that insurance companies are already required to tell regulators the truth. When they swear they’ll go bankrupt if they don’t raise rates, for instance. Or promise their networks have enough doctors so when people buy health insurance they can get an appointment to see the doctors they need. But the issue arose when Blue Shield executives were caught in a lie, giving state and federal regulators completely different answers when asked if they would return their extra billions to policyholders if they dissolved."
Blue Shield can't help itself. It's made that way.
