Insurers sue Michigan Blue Cross alleging illegal conduct

Aetna, Inc. filed suit against Blue Cross Blue Shield of Michigan this week, alleging it uses an anti-competitive scheme that forces other insurers to pay higher prices for hospital care.  Blue Cross reportedly insures almost sixty percent of Michigan residents.  According to the lawsuit, Blue Cross enters into agreements with providers that exclude other insurers and require the providers to charge as much as forty percent more for services.  These allegations would constitute a violation of federal anti-trust law. 

The State and the federal government already have a suit pending against Blue Cross, alleging the same illegal conduct:  Blue Cross sought dismissal of that suit earlier in the year and was denied.  According to the Aetna lawsuit, Blue Cross raised rates to insurers and passed the money generated through higher rates through to providers to induce them to raise rates on insurance competitors.  According to Aetna, 70 Michigan hospitals have signed this type of contract with Blue Cross; one anonymous hospital executive was quoted to the effect that "Blue Cross represents thirty percent of our patients, we can't put that in jeopardy."