Raleigh

Last year, a study from the American Medical Association ranked North Carolina as one of the 10 least competitive health insurance markets in the country.

Two companies - Blue Cross Blue Shield of North Carolina and United Healthcare - control 81 percent of the state's commercial health insurance, according to the AMA study.

Of those two health insurers, Blue Cross is the really big dog.

By some estimates, Blue Cross sells 90 percent of individual health insurance policies in the state. The Department of Insurance says that Blue Cross collected $4.3 billion in premiums in 2009. United Healthcare of North Carolina brought in $1.3 billion.

No matter where you stand on the debate over national health care reform, it is difficult to see the lack of competition in the health insurance market in North Carolina as anything but bad for consumers.

The Blues, here and elsewhere, aren't responsible for that uncompetitive landscape. They were created as not-for-profit insurers because the health care private sector, mostly doctors, didn't want the risk.

That was then. This is now. And no kind of health care reform is likely to work without more competition.

It doesn't matter whether that competition involves the health insurance exchanges envisioned by the Affordable Care Act, or a free market approach that unravels government- and employer-based health care in favor of consumers driving cost savings with informed health care-purchasing decisions.

Last year, the state Senate passed legislation that could improve the competitive landscape in the health insurance market in North Carolina.

The bill blocked what are known as most favored rates clauses, or more commonly, "most favored nations" clauses in health insurance contracts.

The clauses are negotiated by health insurers, typically those with a dominant market share in a region, to prohibit hospitals and medical practices from offering competitors lower rates than those given to them.

Blue Cross officials say that the clauses hold down costs for their customers.

Critics say the clauses prohibit smaller competitors from ever being able to make a dent in a dominant insurer's market share.

In a competitive market, the clauses might mean lower costs. But when one or two companies enjoy a dominant position in the marketplace, the stifling of competition can mean consumers pay more.

With the current legislative session set to end soon, the Senate bill may die. The House has yet to even hold a committee hearing on the legislation. House leaders may be convinced that there is no reason to act.

In the wake of a U.S. Department of Justice anti-trust lawsuit brought against Blue Cross Blue Shield of Michigan, insurers are dropping or altering their use of the clauses.

That doesn't mean that North Carolina legislators shouldn't be taking a hard look at the issue now, before the fate of national health care reform is decided, to ensure that health care consumers here get as good a deal as those in other states.

Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at smooneyh@ncinsider.com.