Blue Cross Blue Shield's $2.7B Tentative Antitrust Settlement Deal Sets To Benefit Americans

The Blue Cross Blue Shield insurance group is working out a tentative agreement to settle $2.7 billion, in an antitrust class-action lawsuit filed in 2012 on behalf of the health plan customers, reports Reuters.

The Blue Cross Blue Shield Association comprises of 36 insurance providers. Approximately one-third of the Americans are covered by Blue Cross companies, according to the New York Times.

What Happened: Subscribers of the Blue Cross insurance plans alleged that no competition clause between the group members violates the Sherman Act and other state antitrust laws, which crack down on monopolistic business practices.

Separately, the consortium of insurance companies are facing a parallel lawsuit from healthcare providers alleging malpractices, where insurers illegally pushed down the payments they receive for medical services, according to Reuters.

The $2.7 billion settlement amount has been approved by the BCBS, but is still subject to approval by each member company's board, and the U.S. District Judge R. David Proctor, who is officiating the antitrust hearing, claims the Wall Street Journal.

Why Does It Matter: The BCBS includes publicly listed insurance companies like Anthem Inc ANTM and Triple-S Management Corp GTS.

The federation guidelines allow members to stake an exclusive claim to the BCBS affiliation within a certain territory, which reduces competition among members.

The tentative agreement could eliminate the rule of threshold on the share of national revenue from a company’s non-BCBS brands to reduce market domination and provide plan subscribers with multiple insurance options.