Blue Cross Blue Shield of N.C. and the Near-Bankrupt State Health Plan

Memo about Blue Cross Blue Shield of NC with permission to post from Democracy North Carolina CLICKHERE

March 2009

With “Sunshine Week” upon us, we’ve been asked to use state and federal campaign finance disclosure laws to shed more light on the ongoing news story about Blue Cross Blue Shield of North Carolina, the near-bankrupt State Health Plan, and legislative oversight of health policy.

An analysis by Democracy North Carolina reveals that no other company the size of Blue Cross has donated more to state politics through its political action committee –- a total of $643,000 from the 2000 election cycle through 2008. Seven company-backed PACs have given more, like those of the big banks and utilities, but all seven of those corporations operate in multiple states and are much larger than Blue Cross. As a not-for-profit corporation, Blue Cross is in a class of its own.

Who are the top recipients of the contributions from the Blue Cross PAC for 2000-2008?

Number One is state Sen. Tony Rand (Democratic Majority Leader and chair of the Senate Select Committee on Employee Hospital and Medical Benefits), who received $36,000. Number Two is Senate President Pro Tem Marc Basnight, who received $35,000. Senate Democrat David Hoyle is next, and several Republicans make it among the top 15 recipients, including former House Speakers Harold Brubaker and Richard Morgan, Rep. Jerry Dockham, and Senators Phil Berger and Tom Apodaca.

Blue Cross has been in the news for the generous payments it receives for administering the health insurance plan for state employees. While the State Health Plan is hemorrhaging, Blue Cross has amassed a reserve fund in excess of $1.2 billion for its three million customers across the state; it rewarded its top six executives with a total of $10.5 million in salaries and bonuses during 2008. The company denies it got a sweetheart deal from special legislation authorizing its no-bid contract for running the State Health Plan, and until recently state Senate leader Tony Rand, who sponsored the special legislation in 2005, has said that disclosure of the contract’s details could weaken Blue Cross’ ability to negotiate competitive reimbursement rates with health-care providers. Sen. Rand is now leading the legislative effort to revise the State Health Plan before it runs out of money.

North Carolina is one of only a few states where the health insurance plan for state employees is supervised by a legislative body rather than by an executive branch agency or independent board. This arrangement puts legislative leaders in the awkward position of monitoring themselves. When substantial political money flows from insurers to legislators, the awkward position becomes more problematic to a skeptical public, even when legislators are doing their best to protect the public interest. On the other hand, the donations from Blue Cross-related donors are a small percent of the millions raised by Rand and Basnight since the 2000 campaign -- and they can only get the money from private sources, including many with competing financial interests in state government, because no public campaign funding option is available in legislative races.
Executives from Blue Cross contributed an additional $117,000 to state politics during the same period of our analysis. Of this amount, $69,000 was donated by chief executive officer Robert J. Greczyn Jr. and $21,933 was donated by chief operating officer J. Bradley Wilson. The top recipients of donations from the executives are Marc Basnight ($20,600), Attorney General Roy Cooper ($18,033), and Gov. Beverly Perdue ($11,000).

See a chart of the leading recipients of Blue Cross-related contributions at:
http://www.democracy-nc.org/nc/2009/bcpac.pdf

Many stories can gain another dimension by searching campaign finance databases. The State Board of Elections’ search engine is helpful but is a self-described work-in-progress (e.g., a donor’s name ending with Jr. may appear correctly by surname, but be found after first names beginning with J for that surname – Daniel Gregory Jr. appears after Joseph Gregory). I’m happy to offer help to reporters looking up donors with a database Democracy NC has assembled from reports processed by the State Board of Elections. The State
Board’s search engine is at:
http://www.app.sboe.state.nc.us/webapps/cf_trans_search/

A useful account of the Blue Cross and State Health Plan saga is at:
http://www.capitol-monitor.org/its-your-money/red-cross-for-blue-cross-massi.php
... and there are several postings at NC Policy Watch, starting with:
http://pulse.ncpolicywatch.org/2009/03/page/3/

For more information, please call Democracy North Carolina Executive Director Bob Hall at (919) 489-1931.