Insurer the beneficiary of lack of contract regulation

Insurer the beneficiary of lack of contract regulation

By Renee Dudley | The Post and Courier

May 22, 2006

In 2006, the South Carolina Legislature repealed a decades-old insurance code, stripping the state’s authority to regulate discounting in contracts between hospitals and insurers.

The deletion allowed the state’s biggest health insurance company, Blue Cross Blue Shield, to negotiate contracts that could cripple its competitors and raise costs for consumers. And Blue Cross was among the special-interest groups lobbying for the repeal, according to a legislator who requested it.

Although the state apparently had not enforced that section of the law, the repeal stripped regulators of authority to step in if it became necessary to regulate anticompetitive activities.

The code appears to have forbidden types of “most-favored-nation” contracts with hospitals and doctors, which some economists said have played a significant role in driving up health care costs in South Carolina.

Here, annual premiums for private health insurance have risen about 85 percent for individuals and 75 percent for families in the past decade, federal data show.

Insurers use most-favored-nation contracts with hospitals and doctors to ensure that they get the best discounts on medical services — rates equal to or better than those of their competitors