It’s been a rough year for North Dakota’s largest insurer.
First state officials decided to pull the health insurance for the Public Employees Retirement System – which provides coverage for over 66,000 state employees, a contract worth as much as $640 million per biennium- from Blue Cross Blue Shield of North Dakota and give it to Sanford Health. The move was the subject of some infighting among lawmakers during the session, but ultimately the decision stands.
Now comes news that a BCBSND subsidiary, Noridian Healthcare Solutions, must pay the State of Maryland $45 million after the company turned the contract to build that state’s Obamacare exchange into a colossal fark up.
“It’s also important to note that a subsidiary’s financial gain or loss does not impact the determination of rates for BCBSND,” CEO Tim Huckle told the Fargo Forum’s Patrick Springer, but that’s a little hard to believe isn’t it?
Keep in mind that the $45 million that BCBSND must now pay to Maryland was only 60 percent of the state’s losses on the exchange debacle, but the company couldn’t afford to pay any more.
“Due to their inability to reimburse the full amount, this agreement represents a fair deal to Maryland taxpayers,” Maryland Governor Larry Hogan said in a statement.
The settlement is structured in such a way as to allow BCBSND to pay out over several years – $20 million up front, and then $5 million per year for five years – but still. I can’t imagine how this company can be saddled with a $45 million settlement and about $320 million per year in lost business without it putting upward pressure on premiums paid by BCBSND customers.
It will be interesting to see what Insurance Commissioner Adam Hamm does. The settlement is subject to regulatory approval, and ostensibly the way the settlement is structured should allow BCBSND to survive, which should give Hamm justification. But this puts a company which serves over 517,000 North Dakotans in a tight spot.
My guess is that all of this is going to show up in higher insurance premiums for North Dakotans, whether BCBSND or the Insurance Commissioner want to admit it or not.
On a related note, Hamm has told me he plans on running for another term in office next year. I suspect his decisions on this issue might be a big part of that campaign.