Blue Cross Blue Shield of North Carolina holds a near-monopoly over the state's health insurance market, controlling 72.5% of all individual and employer-provided health insurance.

    It also holds a no-bid contract to insure state employees - a contract that came under criticism recently after a state audit found the company's administrative expenses were almost $40 million more than expected. Because of how the contract was structured, the state was required to reimburse BCBSNC for all administrative costs but did not have a right to an explanation of those costs from the company.

    Last month the House Committee on Energy and Commerce requested BCBSNC data [pdf] on executive compensation and administrative expenses from 2003 through 2008. Company CEO Bob Greczyn earned $4 million in 2008.

    After receiving a $250 million bailout from the state of this past spring, North Carolina's cash-strapped state employee health plan has reworked its contract with BCBSNC to give it greater oversight of administrative costs.

    Meanwhile, the insurer has proposed draconian measures to cut the costs of covering state employees - including random testing of beneficiaries and their dependents for nicotine and excess body fat, WRAL reports:

     The tobacco program, which will begin next July, will require smokers to quit or get into a cessation program if they want to keep the "standard plan" that requires patients to pay for 20 percent of a doctor bill after copayments and deductibles. Otherwise, the portion rises to 30 percent....

     Starting in July 2011, enrollees with a body mass index - a weight-height ratio that determines whether a person is considered overweight - below 40 can stay in the more generous plan. The standard becomes 35 in July 2012.

    The State Employees Association of North Carolina objects to the proposals, with a spokesperson telling WRAL that the random testing is an invasion of privacy and the forced move to more expensive insurance a form of discrimination. SEANC says efforts to encourage state employees to get healthier should be done through incentives, not punishment.

    At the same time BCBSNC is proposing draconian measures to cut the costs of covering state employees, it's been an outspoken opponent of health insurance reform proposals that include a public option to compete with private insurers - a stance that's drawing criticism.

    Today Health Care for America Now - a national grassroots campaign working for health insurance reform - is holding a protest outside BCBSNC's headquarters in Chapel Hill, N.C. The action will call on the company to let doctors determine patients' needs, stop denying or dropping coverage due to a pre-existing medical condition and scrap all policies that reward its employees for denying care and rejecting claims.

    The protesters will also call on BCBSNC to refrain from using its resources to oppose the health insurance reform proposals being considered by Congress.