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Ken Eudy and Blue Cross

Ken Eudy and NC Blue Cross have a long-term relationship.  Millions of dollars that should have gone to lower health premiums or pay for medical services has gone straight from the pockets of Blue Cross policyholders into Capstrat’s profits.  Sometimes that relationship has meant Eudy has done things on behalf of Blue he probably wished he hadn’t.

Back in 2003 when Blue first announced record profits of $190 million, over a thousand people wrote outraged letters, emails, or made phone calls to Insurance Commissioner Jim Long worried about the effect of the focus on profits on their premiums and whether they would be able to afford health coverage.  Commissioner Long responded by considering asking for legislation from the General Assembly that would allow him to more closely review such huge profits and order refunds for policyholders.

Nonprofit Blue became extremely worried at the prospect of stringent review of their outsize profits.  Eudy, acting for Blue Cross, made a transparent attempt to intimidate ordinary citizens around North Carolina from expressing their concerns to the Insurance Commissioner.  To do this, Eudy demanded, and received, copies of all those letters and comments complete with names and addresses.  Remember, these are ordinary Blue Cross policyholders who legitimately might worry that Blue would be unhappy with what they said and this unhappiness would be reflected in their health premiums or coverage.

It’s impossible to measure the chilling effect Eudy’s request had on further complaints to the Commissioner or the chances of legislation on the topic in the General Assembly.  Suffice it to say no such bill was ever considered that year.

14 Comments


  1. Anglico

    May 17, 2007 at 4:53 pm

    Middle Road beat me to it, and was much more gentle in his/her comments. I was simply going to say: This is total bullshit. I’m not sure what’s possessed you guys to start a pissing contest with a frequent ally over a trumped-up, half-baked story that’s three years old, but whatever is going on, it’s flat-out stupid.

  2. Adam Searing

    May 17, 2007 at 5:59 pm

    Ah – you guys might want to look a little closer – many of those complaints were phone calls – and so left nothing in writing to produce.

    I think it’s a legitimate issue given Blue’s longterm relationship with a professional DC-style lobbying and PR firm, the fact that it is paying for this help with premium dollars and that means higher healthcare costs, and finally it is indicative of Blue’s current influence in the General Assembly. Anyone who doesn’t think that they are one of the most influential groups working in Raleigh is not facing reality.

  3. sturner

    May 17, 2007 at 6:10 pm

    Let me try to put some perspective on this, and I’ll say right up front that I don’t know Ken Eudy and had never heard his name until yesterday.

    Whether there were 67 complaints or 1200 is irrelevant. If Mr. Eudy is going to use the number of complaints to DOI as a barometer for the public’s anger over BCBS’s profits, then he is mistaken.

    Here’s what I know. Patients are eager to talk about rising health care costs because most of the costs are being shifted from their employer to them. So when BCBS has double digit premium increases these patients see it taken directly out of their paychecks on the one hand, and then in the form of higher co-pays and greater deductibles on the other hand. These people are angry and scared.

    And no, they don’t pick up the phone and call Jim Long. Most of them have never heard of the Department of Insurance.

    What I can’t reconcile for my patients is this: BCBS made $190 million in profits. The CEO got a 22% raise to $3 million dollars. Yet, their employer is increasing their out-of-pocket expenses because premiums have gone up. (And I might add that physician reimbursement rates have stayed flat or decreased over the past 5 years when adjusted for inflation.) BCBS can try to rationalize this and say it’s pharmaceutical expenses, or increased Radiology costs, or increased utilization, or whatever. At the end of the day, they had 190 million dollars.

    Adam’s main point is still valid: Blue Cross and the companies that support them control tens of millions of dollars that could otherwise be used to expand medical services or lower premiums.

  4. gercohen psuedonym

    May 17, 2007 at 6:53 pm

    I’m completely baffled by this one. I though progressives were in favor of public records, open meetings, etc. What the heck is wrong with Capstrat/Eudy/Blue asking for copies of complaint letters? Do you actually think that Blue would use the letters to increase the rates or cancel coverage of those who complained? Do you have one iota of evidence for that charge? If anyone has a bunch (whether it is 67, 670, or 67 million) of complaint letters filed against them, they ought to ask for copies of them.
    I’m not defending Blue’s rates or how much they spend on PR. I’m just saying the attack on Eudy is ridiculous.

  5. Middle Road

    May 17, 2007 at 6:59 pm

    I’d like to respond to sturner, but apparently my posts are now being blocked. Interesting. So much for an open debate.

  6. untouchable

    May 18, 2007 at 9:00 am

    For those of you who are confused by responses to a non-existent post, please be advised Adam has not only blocked me from posting, but removed all my prior posts.

    Apparently this is not a discussion forum, but only a soapbox for Adam to present one-sided, poorly researched, often illogical points of view. And you say conservatives are intolerant of dissent. What a coward.

  7. untouchable

    May 18, 2007 at 9:01 am

    FYI, untouchable = middle road

  8. aplum

    May 18, 2007 at 12:33 pm

    Middle Road (aka untouchable), I want to clarify that your posts were not blocked by Adam. I am the only person who has system authorization to block or delete posts, which I did not do. For some reason, your posts were captured in our spam filter, which has happened to other people before such as Anglico and GregFlynn. The Progressive Pulse maintains a policy of free speech. We welcome people of all political persuasion to our discussion. If you or anyone else has problems getting posts to appear, please contact me and I will do my best to release the comments from the spam filter.

  9. Adam Searing

    May 20, 2007 at 10:44 am

    Whew – I’m all for free speech too, but it is getting hot in here. I’m always honored when people think what I write is so infuriating that they actually read it and then want to respond. It’s that sort of debate that is so often lacking in the General Assembly and that we could use lots more of.

    That being said, let me make a couple points. First, I’ve heard from a few folks that one or more of the people making critical posts here work for Capstrat and Ken Eudy. I don’t know if this is correct, and while I have no problem with people joining the debate regardless of where they are from and remaining anonymous if they choose, I think if someone is indeed working for Capstrat and is going to be so directly and personally critical of me, it would be well for that person to disclose their own personal conflict of interest too.

    Second, this debate makes me feel even more strongly about my original premise. The sort of DC-style big money lobbying and PR work provided by Capstrat for a nonprofit health insurer with 95% of the individual market and over 80% of the small business market in NC can only be directed at one thing – image enhancement for BCBS. Why is this neccessary when they have so much of the market? It can’t be they are losing business. The clear reason is that when you are giving $600,000 raises and making multi-millionaires out of all your top executives and you are a nonprofit, you are in for some severe criticism. God forbid, this might result in efforts to have some more oversight of your business, so you spend more policyholder dollars to counter this criticism.

    Simply put, BCBS would not need Ken if they weren’t shocking the state with their huge raises and huge profits.

    This is the way Blue works – they spread around the millions they are making to keep the gravy train flowing at the top. Ken is complict in this effort and for that he deserves every bit of criticism he gets.

    Now folks, as George Bush said (and conservatives would like to forget), “Bring it on!”

  10. Wayne Goodwin

    May 20, 2007 at 11:01 pm

    Not directly related to this topic, but could someone create a separate topic on this site that incorporates the thread at http://www.BlueNC.com about SB 901 and its impact as it comes up for a Senate Commerce vote on Tuesday in Raleigh? Or at least launches a similar discussion here at NC Policy Watch? I believe that if there is a place to oppose the efforts to strip Insurance Commissioner Long of his rate-setting authority it is also on this site. Thanks for your consideration.

  11. Anglico

    May 21, 2007 at 12:58 pm

    You talkin’ ’bout me?

    Maybe you should read the Progressive Pulse more often. I’ve stated clearly on earlier posts that I’m a part-time employee at Capstrat. No mystery there.

    Be careful now. You’re starting to sound like your brethren over at the Puppetshow. When every piece of new information (some made up from thin air) magically ends up supporting the position you started with, well, that’s not necessarily what we like to call an open mind.

    Cheers!

  12. untouchable

    May 22, 2007 at 12:04 pm

    Adam — your last post is quite a collection of tired stereotypes and invented facts. “Eight percent of the small group market?” “DC-style big money lobbying?” “Shocking the state?” Where do you get this stuff?

    I checked the Secretary of State’s site and Mr. Eudy isn’t even registered to lobby for Blue Cross. Are you accusing him of illegal lobbying now? Where was he when Kennedy was shot, anyway? We all best give the Zapruder film a fresh look.

    Or is it *remotely* possible that your positions on some issues are out-of-touch with the broad center of NC opinion? Could it be THAT’S why some bills you support don’t pass — and not because of the nefarious influence of some big-money, back room cabal?

    No , couldn’t be. Because then instead of preaching to the choir ad nauseum, you’d feel compelled to do the hard work of building diverse, effective coalitions including people who don’t share all your world views. You might even have to consider the heretical notion that people on more than one side of an issue can sincerely believe they’re doing the right thing. Or begin supporting “half a loaf” compromises instead of tilting at windmills.

    Nah, that’s crazy talk….

  13. sturner

    May 22, 2007 at 1:24 pm

    Untouchable…I don’t know where Adam gets his figures, but I’m confident he can defend himself. Let me share with you the financial data from my primary care practice. These figures support what Adam is saying. They are updated to April 2007.

    Our practice accepts all private insurances:
    BCBS is 51.2% of total revenue
    UnitedHealthcare is 15.7% of total revenue
    Cigna is 10.5%
    all others less than 5%.

    With the consolidation seen over the last 5 years in the health insurance market, BCBS is in an extremely strong position. They have the profits to prove it.

    So here we have BCBS with historically high profits and overwhelming dominance in market share….yet they fight parity vigorously. The question has to be asked of BCBS regarding parity: if not now, when? The answer of course is never, unless the legislators intervene.

    You want to know what this reminds me of? Republicans and tax cuts. There is no scenario for Grover Norquist where tax cuts are not the answer. Clinton-era surplus…tax cuts (it’s your money!), Bush-era deficits…tax cuts (you don’t have any money, but we need to stimulate the economy!), and my personal favorite…Declare war! (and be the first administration to not raise taxes to pay for it).

    Republicans are not honest brokers on taxes, and private insurance companies are not unbiased on expanding medical services.

    Obviously BCBS has the means to offer parity, they just don’t have the will. As to compromise, as I’ve said previously, the mental health community has made alot of concessions along the way. Parity proponents are just asking that North Carolina do what 37 other states have decided is right. I don’t think that is “out-of-touch” with the broad center of public opinion.

    Addendum: I may not sound like it, but I actually like BCBS (at 50% of my revenue, I better). IF private insurance companies have to exist (which is a fight for another day) than they are a reasonably conscientious company. But where they can behave better, we should insist that they do so. After all, North Carolina has been very very good to them.

  14. untouchable

    May 23, 2007 at 6:29 pm

    I’m not so confident that Adam gets the numbers right. Case in point: his May 17 post ( Affordable Coverage for Everyone v. Wealthy Special Interests) arguing the American public is ripe for universal coverage because it is now a “majority position that we should have affordable health coverage for everyone” and “among the majority who support coverage for all, most are willing to pay $500 in extra taxes to achieve this goal.”

    Read the NY Times survey he’s quoting at http://graphics8.nytimes.com/packages/pdf/national/03022007_poll.pdf
    (see questions 31 and 32). What the survey actually found is that only 49% of respondents would pay $500 out of their own pockets for universal coverage. (What’s worse, the actual cost of providing universal coverage, at least initially, is very likely to be considerably MORE than $500.)

    The only way Adam can make that a resounding mandate for universal coverage is through the tortuous construction “among the majority … most are willing.” It would be far simpler to say that 51 percent of people are NOT willing to spend even $500 to implement universal coverage.

    The good news is that a few years back, the “acceptable” cost figure in polls was more like $50. Perhaps as people get more worried about losing their own coverage, they’re more willing to pony up.

    But my point is that Adam twists the facts to support his world view: hordes of well-intentioned citizens and “simple justice” are stymied by “big money lobbyists” and back room deals. What’s really happening is that although our health care system sucks, for a lot of people it doesn’t suck so badly that they’re willing to pay more for a better one. With the public divided, lawmakers aren’t going to stick their necks out for a new system that might not work.

    Once you or a loved one falls through the cracks, you can bet you feel differently. But our lousy system is just barely good enough to keep those folks in the minority.

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