What happens when health insurers become too large?

Antitrust Suit in Michigan Tests Health Law

Blue Cross drew the attention of federal prosecutors because of its use of what are known as most-favored-nation clauses in the contracts it signed with dozens of hospitals. Prosecutors charged that Blue Cross squashed competition by demanding that hospitals charge as much as 40 percent more to rivals, and it was even willing to pay hospitals more to sign these contracts.

That practice seems to have stymied competition. Priority Health, the insurer owned by Spectrum Health, says it has not been able to negotiate reasonable contracts with hospitals in places like Lansing. Blue Cross says it is a business decision being made by Priority Health to stay out of any market.

Other insurers also use these contracts, and regulators in Georgia, for example, have questioned their use. WellPoint, which owns the Blue Cross plan in Georgia, declined to comment.