There is an increasing tendency among pundits to note that one insurance company controls most of the insurance plans in a state. This company is almost invariably WellPoint. In fact, WellPoint is the largest insurance provider in the US. However, identifying them as WellPoint, I think, does readers a disservice.
How many people have heard of WellPoint? I am guessing not many. How is this possible when so many people have them as their insurer?
It’s because most of us know them as Blue Cross Blue Shield. WellPoint, among other companies, licenses the Blue Cross Blue Shield brand.
This is important because I think most people have a good sense for what Blue Cross Blue Shield is and how they do business. If we are going to evaluate potential monopoly-like practices then reputation is important. My sense is that in many states most customers are happy with Blue Cross Blue Shield. At least in North Carolina many providers hate it. That’s because BCBSNC uses its market position to enact monopsony power. That is, like Wal-Mart BCBSNC puts enormous downward pressure on suppliers.
This means that BCBSNC plans tend to be much cheaper than the competition. This supplier squeeze might also be why BCBSNC is so opposed to a public option – the public option is trying to crowd in on their competitive advantage.