As the college baseball regular season enters its final month, it’s time to play buy and sell. As in, do you buy or sell No. 4 Southern Miss as a national seed in the NCAA Tournament? Does defending national champ Mississippi State make the NCAA field? Does Ole Miss, once No. 1, make the SEC Tournament? Does Mike Bianco return to coach next year? The Clevelands answer – or guess.
Gov. Tate Reeves has allowed large pay raises for statewide elected officials — including the governor — to pass into law without his signature amid his vetoing a handful of other measures.
Starting in 2024, after the next election, Mississippi’s statewide elected officials will see pay increases ranging from $25,000 a year to $60,000 a year, or 22% to 67% increases. The governor’s salary will increase 31%, from $122,160 to $160,000. Lawmakers, with some debate, passed the salary increases at the end of this year’s legislative session. A proposal to raise legislators’ pay died.
Lawmakers this session passed a raise in teachers’ pay that averages $5,140, increasing starting teacher pay from $37,123 to $41,638.
Mississippi’s median household income is $45,081 a year — the lowest in the country.
The increases for statewide elected and other officials taking effect in 2024 are:
Office
Current salary
2024 salary
Governor
$122,160
$160,000
Attorney General
$108,960
$150,000
Secretary of State
$90,000
$120,000
Insurance Commissioner
$90,000
$150,000
Treasurer
$90,000
$120,000
Auditor
$90,000
$150,000
Agriculture Commissioner
$90,000
$120,000
Transportation Commissioners
$78,000
$95,000
Public Service Commissioners
$78,000
$95,000
The lieutenant governor and House speaker’s salaries will increase from $60,000 a year to $85,000 a year under the new law.
Reeves did not comment on the pay raises. But in a social media post on why he vetoed lawmakers’ spending $50 million on upgrades at the University of Mississippi Medical Center, Reeves said: “It is important to ensure that your money is invested wisely: based on creating value for you. This is the first of several spending vetoes that we will share and answer questions on in the coming days.”
Blue Cross & Blue Shield of Mississippi and University of Mississippi Medical Center have agreed to utilize a mediation process to settle the contract dispute that has left the state’s largest hospital out of network with its largest insurer.
The decision comes after Mississippi Insurance Commissioner Mike Chaney sent them a letter on April 21 urging them to agree to mediation. The arbitration process involves bringing in an expert and impartial mediator who can preside over new contract negotiations.
Chaney told Mississippi Today on Thursday that he’ll be providing several recommendations for prospective mediators by next week.
Blue Cross and UMMC used the same mediation process to settle their last contract dispute in 2018, and it took around ten days to strike a deal, Chaney said. At that time, Blue Cross agreed to remove language that made the contract evergreen, meaning the insurance company could no longer change the contract terms at any time.
UMMC claims that between 2014 and 2017, Blue Cross made annual changes to their reimbursement rates that decreased the overall reimbursement UMMC received to care for Blue Cross patients.·UMMC received an overall 1% increase as part of the 2018 negotiations, but no changes have been made to their reimbursement rates since then.
After the two parties agree on who the mediator should be, a deadline will be set for them to settle their differences. Chaney told Mississippi Today that the deadline will likely be June 1 – 30 days before the end of the 90-day “continuity of care” period, where certain Blue Cross patients can still receive care at UMMC and have their insurance accepted.
Under state agency rules, Chaney is not allowed to directly mediate or help settle disputes over contacts between insurance companies and health care providers.
Chaney’s involvement stems from concerns that UMMC not being in Blue Cross’ network runs afoul of state network adequacy regulations due to UMMC providing services that cannot be found elsewhere in the state, such as its organ transplant unit and children’s hospital.
BCBSMS maintains that even without UMMC, it is still meeting its network adequacy requirement. BCBSMS also said that the remedy in a situation where network adequacy is an issue is for it to provide network level benefits to its customers for those services, which it has offered to do by directing its members to sign a written direction of payment instructing the insurer to pay the hospital.
UMMC has declined to accept those payments from BCBS, arguing that it would allow BCBSMS to continue paying at unsustainable rates.
UMMC and Blue Cross have not been in communication since April 1, when UMMC officially went out of network with the insurance company, according to officials from both entities. Tens of thousands of Mississippians – some of them gravely ill and others in need of advanced specialties only available at UMMC – are stuck in the middle of the dispute.
Though the two parties have had similar contract disputes in previous years, this is the first time UMMC has been removed from BCBSMS’ network.
As a result, tens of thousands of Mississippians have been left to face higher out-of-pocket medical expenses or find care elsewhere. Potential transplant recipients who have spent months or years on organ donation waitlists have been placed on hold. Parents of children who require specialized care that can only be provided at UMMC’s children’s hospital have been left with costly and inconvenient options for continuing their child’s care.
UMMC is asking Blue Cross for substantial increases to inpatient, outpatient and professional reimbursement rates, some as large as 50%. Overall reimbursement from Blue Cross would increase by around 30% in the first year of the new contract.
Mississippi has the lowest reimbursement rate from commercial insurance companies for inpatient services in the nation, according to a 2021 white paper by the actuarial and consulting firm Milliman. While UMMC maintains that BCBSMS is paying them well below market rates for other academic medical centers in the region, BCBSMS argues that agreeing to the increases would necessitate significant premium increases for their customers – despite a Mississippi Today investigation that revealed the insurer is sitting on an enormous reserve of money.
The state accepted the guilty pleas of Nancy and Zach New in Mississippi’s sprawling welfare scandal on Tuesday — a move that makes their agreement to cooperate with prosecutors and testify against their co-defendants official.
Nancy New, a 69-year-old former educator, is pleading guilty to four counts of bribing a public official, two counts of fraud against the government, six counts of wire fraud and one count of racketeering. Her deal comes with a total maximum sentence of 100 years, but prosecutors have recommended that the state sentence her to equal or lesser time than her federal sentence, once federal sentencing has occurred.
In other words, state prosecutors recommend Nancy New serve her entire sentence in federal prison — allowing her to avoid serving time in the more barbaric state prisons — and serve no additional time for the state charges above what she serves in the federal case. She pleaded guilty in the federal case earlier last week to one count of money laundering, which carries a maximum sentence of ten years.
Zach New, the 39-year-old vice president of his mother’s nonprofit, pleaded guilty to the same charges, minus racketeering and one less count of wire fraud. State prosecutors have offered him the same deal to serve only the number of years he receives in the separate federal case. He pleaded guilty in the federal case to conspiracy to commit wire fraud, which comes with a maximum sentence of five years.
Prosecutors split off Zach’s charge in a separate bill of information, a document that is filed when a defendant agrees to plead guilty without the grand jury handing down an indictment, to ensure that Zach would be able to serve his time in federal prisons.
Both Nancy and Zach New have agreed to cooperate with prosecutors and testify against their co-defendants. Both state and federal criminal investigations are ongoing and could result in charges against additional people, sources close to the probes say.
A proposed overhaul of Mississippi’s state financial aid programs is complicated, unlikely to address existing issues and could create problems for low-income students, according to a new report from the Urban Institute.
Instead of pursuing the Mississippi One Grant, the report recommends the state consolidate its college aid programs into two simple grants: One program to provide low-income students with need-based aid, and another that makes awards based on a students’ grades or test scores.
“The state will always face trade-offs between controlling the budget and providing the support on which so many students depend,” the report says. “But designing programs that allow students who cannot afford college on their own is the most promising strategy for ensuring a high return on the state’s investment.”
The report also says the One Grant will not effectively help more students get degrees, in part because it will decrease the funding available for low-income students who already struggle to afford college in Mississippi, the poorest state in the country.
“Taking the money from students who really depend on it just doesn’t seem like the best way to balance the budget, because it’s very short-sighted,” said Sandy Baum, one of the report’s authors.
Baum and her co-author, Kristin Blagg, have studied state aid programs in Texas and New Jersey. Baum and Blagg studied annual reports from Mississippi’s Office of Student Financial Aid, looked at existing research on state aid and college access, and talked with Get2College, a local non-profit.
Mississippi’s three college financial aid programs have faced scrutiny in recent years. Advocates for college access in Mississippi, like Get2College, say the state’s programs no longer serve their original purpose, which is to help low income and middle class students afford to go to college.
The Postsecondary Education Financial Assistance Board, which oversees Mississippi’s financial aid programs, is primarily concerned about the growing cost. As the price of college tuition increases in Mississippi, so has the cost of the state financial aid programs, particularly the Higher Education Legislative Exchange Grant for Needy Students, which pays for all four years of undergrad for low-income students.
The board has explored ways to minimize the cost of its programs since 2019. The One Grant, unveiled last October, was the board’s latest proposal.
Under the One Grant, the state would award aid based on a student’s financial need and academic merit. The highest award of $4,500 would go to the poorest students with the best ACT scores — that award is significantly less than many low-income students currently receive from the HELP grant.
“Every state has different demographics, different circumstances and different goals,” Baum said. “But what’s always going to be true is, awards based on test scores, and on high school grades, are going to be disproportionately tilted towards more affluent students.”
Research shows that affluent students whose families can afford college are more likely to go regardless of the financial aid they can receive, Baum said, whereas grants and scholarships make more of a difference for low-income students.
Baum said she would urge policymakers in Mississippi to see how the One Grant creates “this problem of trying to kill two birds with one stone.”
“It’s really tough to take one specific policy tool and use it to solve both of your very diverse goals,” she said. “That’s not something that’s specific to Mississippi.”
College is increasingly unaffordable for the average Mississippi family as the eight public universities have steadily increased tuition. Yet lawmakers and members of the Post-Secondary Board have looked for ways to limit the number of students who can qualify for college financial aid in Mississippi.
Last year, state Sen. Briggs Hopson, R-Vicksburg, proposed a bill that would raise the ACT scores required to get financial aid through the MTAG and MESG programs. His proposed requirements — 17 for MTAG and 30 for MESG — are higher than the minimum ACT score of 16 that most students need to gain entrance to Mississippi’s public universities.
The report says it is “counterproductive” that the ACT standards to receive state aid in Mississippi are higher than the scores required to be admitted to public universities.
“You don’t have to believe that everybody should go to college right after high school to think that, if you’re going to accept students and enroll them, you should do everything you can to help them succeed,” Baum said. “And that means both giving them academic support and social support and financial support.”
“It’s hard to see the logic of saying, you know what, let’s accept them and then hope that they can’t afford to come,” she added.
The One Grant has floundered as a proposal. This session, no lawmaker introduced the One Grant in a bill. The Post-Secondary Board is now considering ways to engage lawmakers in discussion about state financial aid programs this summer.
Baum and Blagg hope board members will consider the proposal the next time they think about retooling state aid. Their report recommends that Mississippi should consider programs that have the same deadline, require minimal application materials, pay for summer semesters, and provide aid to part-time and adult students.
“In the next go around, a good next step (for the board) is thinking clearly about separating out where you want the aid for merit to go and where you want aid for financial needs to go,” Blagg said.
Editor’s note: Get2College is a program of the Woodward Hines Education Foundation, a Mississippi Today donor.
This past session the Mississippi Legislature gave $10 million to K-12 private schools even though the state constitution appears to be one of the few in the nation to prohibit the practice of providing public money to private schools.
Mississippi is among the 37 states that have so-called “Blaine Amendment” constitutional provisions that ban the expenditure of public funds for private, religious schools. But Mississippi takes that provision a step further: its 1890 Constitution appears to prohibit the expenditure of public funds at any private school.
“No religious or other sect or sects shall ever control any part of the school or other educational funds of this state; nor shall any funds be appropriated toward the support of any sectarian school, or to any school that at the time of receiving such appropriation is not conducted as a free school,” Section 208 of the Mississippi Constitution reads.
Despite the language, the Legislature in recent years has both appropriated funds to private schools and provided tax credits to those who contribute to private schools.
Senate Accountability, Efficiency and Transparency Chair John Polk, R-Hattiesburg, told his colleagues who were opposed to the public funds going to private schools that the private schools had been impacted by COVID-19 and needed help to improve their infrastructure with the federal funds.
“We want to make sure they have some ability to improve their conditions,” he said.
During the lengthy debate of the legislation, though, no one brought up Section 208.
“We believe public money should be spent on public schools,” said Brandon Jones, an attorney and director of political campaigns and policy for the Southern Poverty Law Center Action Fund. “There are a lot of folks working hard against that idea. This appropriation is part of a coordinated effort by special interest groups and politicians to redirect public dollars to private schools.”
As far as Section 208, Jones said, “Our state constitution has prohibited the use of public dollars for private schools for years, but those types of protections are under attack across the country. As an example, there is a case from Maine that is in front of the U.S. Supreme Court right now that could make it even easier for politicians to send public money to private schools.”
That Maine case — Carson vs. Makin — involves state law, not the constitution. Maine law allows students to access public funds to attend private school in certain rural areas. But the law prohibits the public funds from being used at religious schools.
The argument before the Supreme Court, according to SCOTUSblog, is “whether a state violates the religion clauses or equal protection clause of the United States Constitution by prohibiting students participating in an otherwise generally available student-aid program from choosing to use their aid to attend schools that provide religious, or ‘sectarian,’ instruction.”
Earlier the Supreme Court ruled in a case from Montana (which does have a provision in its constitution preventing the expenditure of public funds at religious schools) that if money was being provided to non-religious private schools, it also had to be given to religious schools.
The difference between Montana and Mississippi is that the Mississippi Constitution seems to also prohibit providing public funds to all private schools — whether religious or not.
“Mississippi’s Constitution clearly prohibits the appropriation of funds to any private school,” said Nancy Loome, executive director of the Parents Campaign, a public school advocacy group. “The Legislature in recent years has routinely flouted this constitutional mandate, sending taxpayer dollars to private academies while intentionally underfunding the public schools for which the Legislature is responsible.”
South Carolina, like Mississippi, has a clause in its constitution prohibiting the expenditure of public funds at both religious and non-religious schools.
Just as it did with the federal American Rescue Plan Act funds, Mississippi in 2020 provided federal Coronavirus Aid, Relief and Economic Security Act funds to private schools. In South Carolina, the issue of providing public CARES Act funds to private schools was the subject of a lawsuit.
In 2021, a federal judge ruled the South Carolina Constitution prohibited providing federal CARES Act funds to private schools. The judge ruled that the state constitution did not discriminate against religion because it prohibited public funds to all private schools.
The language in state constitutions banning the funding of religious schools is traced back to James Gillespie Blaine, the Republican minority leader of the Maine House of Representatives. He advocated for an amendment to the U.S. Constitution preventing public funds to religious schools. Efforts to place the language in the U.S. Constitution narrowly lost, but through a national movement similar language was added to many state constitutions in the 1800s.
Supporters of school vouchers argue that the language in the state constitutions banning public funds to private schools is discriminatory. The amendments, many believe, was aimed originally at Catholic schools. Many Catholics argued that they were discriminated against in the public schools.
Loome argues that preserving public funds for public schools is far from discriminatory.
“During and following integration in the 60s and 70s, lawmakers diverted much-needed funding and resources away from public schools and into private segregation academies,” she said. “It was wrong then, and it is wrong today. The public’s funds belong in the public’s schools, and our constitution makes that plain. “
She added, “The private schools that are getting millions of taxpayer dollars have no accountability for the expenditure of public funds. Public schools are held accountable publicly, with ratings and test scores, and publicly available data. If private schools operate in private, as is their right, they should do so solely with private funds.”
Others argue that parents should have the right to spend their tax dollars on a school of their choice.
Christy Van of Jayess didn’t know what was wrong with her son. It was 2020, and her six-year old, Cooper, was living with stomach issues that put him in near-constant pain and limited his ability to have a normal childhood.
They weren’t getting any answers from Cooper’s pediatrician or a gastroenterologist in Flowood.
“They tried to help him, but I really felt like they weren’t taking me seriously, and I knew that something else was wrong,” Van said.
That changed when her son was referred to Dr. Michael Nowicki, a children’s gastroenterology specialist at University of Mississippi Medical Center. After she told Nowicki about Cooper’s symptoms, he ordered a sweat test.
With that one test, Nowicki was able to diagnose Cooper with cystic fibrosis, a disorder that causes severe damage to the lungs, digestive system and other organs. The condition affects the cells that produce mucus, sweat and other bodily fluids, leading these fluids to thicken and block critical bodily functions.
The disorder manifested in Cooper as a pancreatic deficiency that prevents him from properly digesting fats.
“I’ve never been so shocked in my life. It was devastating for us,” said Van. “At first we were just so overwhelmed, but those doctors at UMMC took care of us.”
Cooper will have to visit a hospital every three months for the rest of his life. He currently sees Dr. David Josey, a pediatric pulmonologist at UMMC, along with a slew of specialists who help manage different facets of living with cystic fibrosis.
“It was just so devastating to me to hear the word ‘forever,’ but Cooper doesn’t dread (going to the doctor)… Cooper just really loves him (Dr. Josey) and his whole team.”
Christy Van and her son, Cooper Van, 8, demonstrate how to use high-frequency chest wall oscillation while at home in Jayess, Miss., Thursday, April 21, 2022. The vest clears the lungs of excess mucus for cystic fibrosis. Cooper was diagnosed with the disorder when he was 6 years old. Credit: Eric Shelton/Mississippi Today
But now the future of Cooper’s care is uncertain. He is one of tens of thousands of Mississippians who have been impacted by UMMC going out of network with his family’s insurer, Blue Cross & Blue Shield of Mississippi. The dispute between the two stems from disagreement over reimbursement rates and Blue Cross’ quality care plan, which measures hospital performance and whether services provided to patients are adequate.
Cooper can continue receiving care at UMMC through his parents’ Blue Cross plan until July 1. Then, they have to make some tough decisions. Paying thousands of dollars per month out-of-pocket each month isn’t an option for a single-income household like his.
UMMC is the only accredited cystic fibrosis care center in the entire state of Mississippi.
Cooper has a daily at-home care routine that allows him to live a normal life. Every morning when he wakes up and before he goes to bed he uses a high-frequency chest wall oscillation device, or a vest that vibrates at a high frequency to clear his lungs of excess mucus.
He also takes a variety of medications that have cleared up his digestive issues.
The treatments prescribed by his UMMC doctor have allowed him to flourish and grow to be an energetic eight-year-old who loves to play sports, his mom said.
“It’s changed his life,” Van said of Cooper’s treatment. “You couldn’t look at him and tell that there was anything wrong with him.”
Switching Cooper’s care to a hospital in network with Blue Cross isn’t an easy fix. UMMC is. The closest alternatives are the University of Alabama Medical Center in Tuscaloosa and Tulane Medical Center in New Orleans.
Though it comes with added financial burdens, the only option the Vans see is buying Cooper a separate health insurance plan that’s in UMMC’s network.
“That is where I want him to be,” Van said. “They saved his life and have given him back his quality of life … we’re just hoping and praying that it’s going to work itself out.”
UMMC and Blue Cross have not been in communication since April 1, when UMMC officially went out of network with the insurance company, according to officials from both entities. Mississippi Insurance Commissioner Mike Chaney on Thursday penned a letter urging the two parties to utilize the same mediation process that was used to settle their contract dispute in 2018.
UMMC is asking Blue Cross for substantial increases to inpatient, outpatient and professional reimbursement rates, some as large as 50%. UMMC maintains it’s asking for below-market rates for academic medical centers. Blue Cross officials say that steep rate hikes would necessitate a substantial increase in customer premiums – despite a Mississippi Today investigation that revealed the insurer is sitting on an enormous reserve of money.
Medications for cystic fibrosis are pictured here in Jayess, Miss., Thursday, April 21, 2022. Cystic fibrosis is a disorder that causes severe damage to the lungs, digestive system and other organs in the body. Credit: Eric Shelton/Mississippi Today
Nicolette Brokaw of Vicksburg has been going to UMMC since she was a baby. Now an adult, she has been seeing the same doctor for a decade, who treats her for an Alpha-1 antitrypsin deficiency (AAT deficiency), a condition that significantly raises a person’s risk for liver and lung disease.
Six months ago when Brokaw received a letter from Blue Cross that alerted her to the contract dispute from UMMC, she decided it wasn’t worth worrying about. She couldn’t control the outcome, and they had resolved similar disputes in previous years.
Now, with UMMC out of network, she’s dreading the laborious and emotionally draining process of finding a new doctor who she trusts.
“I’m going to have to go through the process of giving my whole life story again,” Brokaw said. “They’re going to look at me like I have six heads, and I don’t want to go through that.”
An even bigger worry is finding a new doctor for her three-year-old son with autism, Liam. Recently she’s become worried that Liam is having absence seizures, which are common in autistic children and involve brief, sudden lapses of consciousness.
Brokaw said Liam sometimes stares off into space for a bit, and her intuition tells her it’s not normal distraction. If she could, Brokaw would take Liam to Dr. Lamar Davis, a children’s neurologist at UMMC, who Liam has seen before.
“I wish I could go back to him for this problem, but I can’t because I can’t afford to pay out of pocket for a neurologist,” Brokaw said. “… I wish money wasn’t an object, but it is.”
Currently, Brokaw is trying to get Liam health coverage under a special eligibility category of Medicaid in Mississippi called Disabled Child Living at Home.
Although Liam has already been diagnosed with autism, due to Social Security disability rules, the Mississippi Division of Medicaid is requiring that he receive a behavioral evaluation with an autism rating scale to become eligible for coverage.
“The first diagnosis we got was black and white, but it’s not good enough,” Brokaw said. “It’s ridiculous.”
Brokaw is considering taking Liam to Ochsner Medical Center in New Orleans, but that comes with its own financial challenges. Even if she’s able to get an appointment there, the added gas and hotel costs are going to put added strain on her family, which relies solely on her husband’s income.
What really bothers Brokaw is the knowledge that the people making the business decisions that have put the health of her family, and others at risk are insulated from the consequences of those decisions, she said.
“I can’t imagine what these other people who basically live at the hospital are going through,” Brokaw said. “It’s these people that are taking the hit, not the CEO or the board members. They’re not going to have to worry about putting gas in their car. They go back to $500,000 homes. They can go to the doctor whenever they want to.”
Multiple groups have filed a federal lawsuit claiming Mississippi’s three Supreme Court districts, which have not been redrawn in more than 35 years, dilute Black voter strength.
The lawsuit was filed in the Northern District of Mississippi on behalf of Black citizens of the state who claim the districts should have been redrawn since the 1980s by the Legislature to adhere to population changes found by the U.S Census.
Map of Supreme Court Districts
“Mississippi’s Supreme Court districts dilute the voice and the votes of Black Mississippians in violation of federal law,” said Ari Savitzky, senior attorney for the American Civil Liberties Union Voting Rights Project.
The state, which has an African American population of about 38%, has nine Supreme Court justices – one of which is Black.
Justice Leslie King is the fourth Black Mississippian to represent the Central District on the state’s high court. All four Black judges initially were appointed to a post on the court by governors and later won election to the court.
When asked why it had been so long since the Legislature had redrawn the districts, House Speaker Philip Gunn had no comment other than to say he was not familiar with the lawsuit.
In 2020, Latrice Westbrooks, a member of the Court of Appeals, sought to become the second African American serving simultaneously on the Supreme Court for the first time in the state’s history and sought to be the first Black woman to serve on the Supreme Court. She lost by about 12,000 votes to Kenneth Griffis who garnered about 51% of the vote.
The three transportation commissioners and three public service commissioners also are elected from the three Supreme Court districts. Willie Simmons of Cleveland, who is African American, currently serves as the Central District transportation commissioner.
He is the first African American elected to serve as a public service commissioner or transportation commissioner.
The lawsuit says the Central District “could easily be redrawn, consistent with traditional principles, to have a majority of eligible Black voters. Especially in light of the high degree of racial polarization in voting in Mississippi, such a change is needed to ensure that Supreme Court elections comply with federal law and allow Black Mississippians a fair and equal opportunity to elect candidates of their choosing.”
The lawsuit says the districts violate federal voting rights law. Because of federal law, states must redraw state legislative and U.S. congressional districts every 10 years to adhere to population shifts found by the decennial U.S. Census. States have more leeway in adhering “to one-man, one-vote” or equal representation principles in judicial districts, but still there are federal and judicial guidelines that must be met in drawing the judicial districts.
“Equal opportunities to ascend to high leadership roles like state Supreme Court justice will draw in more potential leaders committed to building their lives and careers in Mississippi,” said businessman Dyamone White, one of the plaintiffs in the lawsuit. “As a business owner who plans to build a family here in Mississippi, I am committed to building up our state. That means creating Supreme Court district maps that give Black Mississippians fair representation and equal opportunity.”
Other plaintiffs are Ty Pinkins, a 20-year Army veteran and Georgetown law graduate; educator Constance Slaughter Harvey-Burwell; and state Senate Minority Leader Derrick Simmons of Greenville.
The lawsuit was filed by the ACLU, ACLU of Mississippi, Southern Poverty Law Center (SPLC) and the law firm of Simpson Thacher & Bartlett.
The next Supreme Court elections are slated for 2024 when three members of the court will be up for re-election. The PSC and transportation commissioners will be on the ballot in 2023.
Janah Garriga’s 12-year-old daughter, Joshlyn, was diagnosed with T-cell leukemia in February. Joshlyn loves her doctors and nurses at the University of Mississippi Medical Center.
But when Garriga took her daughter to an appointment in early April, she was asked to sign a letter accepting full financial responsibility for all the costs of her daughter’s treatment because the hospital recently went out of network with Blue Cross and Blue Shield of Mississippi, her insurance company.
The letter turned out to be a mistake on the hospital’s part. Because Medicaid is her daughter’s secondary insurer, Garriga fortunately won’t be on the hook for out-of-pocket cancer treatment — unlike many other families across the state.
But after so much confusion, she still worries something could go wrong, complicating her daughter’s cancer treatment.
As the stalemate between the state’s largest hospital and its largest insurer drags on, some of themost gravely ill Mississippians are reaping the consequences, forced to delay needed care, travel out of state and leave doctors with whom they’ve built relationships over years.
Blue Cross of Mississippi is refusing to pay UMMC more for its services. Meanwhile, the for-profit mutual insurance company is sitting on an enormous reserve of money, a Mississippi Today investigation shows, hiding its top leaders’ compensation amounts and transferring its members’ power to longstanding company executives.
Most policyholders caught in the middle of the insurer’s dispute with UMMC are unaware that they have signed away their right to participate in the board’s decisions and are surprised to learn that Blue Cross holds a surplus of hundreds of millions of dollars.
When Garriga learned about the size of Blue Cross of Mississippi’s surplus, she was speechless for a moment.
“It’s greed,” she said. “… And it’s sad that it’s people’s life at stake.”
Financial records show the company has accumulated far more than what regulators require to protect consumers, and perhaps the largest such surplus by percentage of any Blue Cross company in the country.
The value of the company’s surplus stands at about $750 million, about eight times the level that would trigger regulators to take action and about four times the level Blue Cross sets as the floor for companies with its trademark.
“That is extraordinarily high for a company of that size,” said Brendan Bridgeland, an attorney and director of the Boston-based Center for Insurance Research, which advocates on behalf of insurance consumers. “It seems like (policyholders) are probably paying more than they should for their health insurance.”
Bryan Lagg, senior vice president of consumer markets and sales at Blue Cross of Mississippi, said the reserves are a “critical component” of the company’s financial security and its ability to pay for future health care services.
“This is even more important today due to the cost of health care services,” Lagg said in a statement. “We take great pride in knowing payments for health care services (for our Members and Network Providers) will continue even in the event of a natural disaster, economic crisis or the uncertainties of a pandemic.”
The surplus has attracted little public scrutiny in part because of a governance structure that curtails oversight.
As a mutual insurance company, Blue Cross of Mississippi is supposed to be owned by its policyholders, who can participate in meetings and hold company executives accountable. But policyholders give up that right when they sign up for coverage and can earn it back only by mailing a written request to the company's headquarters. That means a handful of board members have been making decisions that affect hundreds of thousands of Mississippians with almost no oversight from either investors or policyholders.
Blue Cross officials did not answer questions about the structure of the company, including how many members have filed written requests or what the process is after a request is filed.
Consumer advocates say the size of the surplus means the company could afford to pass savings on to consumers by reducing rates. Instead, Blue Cross has raised premiums for many of its consumers in recent years.
In January 2020, for example, it hiked fees for small business plans by 13%, affecting 55,000 Mississippians. Premiums for two types of individual health plans were also increased 16% in the same time frame. The company cited a significant underwriting loss, which occurs when a company has to pay more in claims than it expected.
Chuck Bell, programs director at the advocacy organization Consumer Reports, has studied health insurance surplus levels around the country. After reviewing the surplus level held by Blue Cross of Mississippi, he said he sees a role for state oversight. As a for-profit insurer, the company could return excess surplus to the community by lowering rates.
“We think it's appropriate for the state to put some guardrails around how much surplus can be accumulated, and not leave it to the boards and managements of the health plans, who may or may not take action,” he said.
After raising rates in 2020, the insurance company went on to triple its profits that same year, according to its annual statement. The insurer made over $60 million that year compared to around $20 million in 2019.
Officials with the company said the increase was due primarily to stock investment performance and a delay in the impact of COVID-related claims. The company’s 2021 net income was just under $17 million with a “significant underwriting loss,” said Cayla Mangrum, manager of corporate communications for the company.
Lagg said the company uses the vast majority of customers’ premiums to pay their health care costs, meeting and often exceeding federal requirements for that metric. Instead of relying on premiums to make money, the company says it profits through “administrative efficiency and investments.”
When an individual signs up for insurance with Blue Cross of Mississippi, a seldom-noticed part of the policy states the person transfers that power to company executives.
“As a part of the Subscriber’s enrollment for membership and coverage with Blue Cross & Blue Shield of Mississippi … he or she has appointed Blue Cross & Blue Shield of Mississippi’s President, Executive Vice President, and Secretary as proxies to cast his or her vote, upon concurrence of at least two of them, on all matters arising at membership meetings,” the policy states.
If the policy holder wants to challenge the proxy, he or she must file a “written revocation” with the company.
Officials at Blue Cross of Mississippi declined to answer Mississippi Today’s questions about this policy.
Typically, Bridgeland said, a mutual company will notify policyholders each year about an annual meeting or upcoming vote and request a proxy designation – not require customers to appoint the executives as proxies in perpetuity when they sign up for coverage.
Bridgeland said he had never seen a mutual insurance company with such strict limits on policyholder participation.
“It runs against any sort of corporate governance recommendations I’ve seen and is very much out of line with best practices,” he said. “And the reason is because you don’t want to make management completely insulated, which this effectively does.”
In theory, a mutual company puts policyholders in charge of executives. But Bridgeland said things rarely work out that way, because it’s difficult for individual policyholders to exercise power, so executives treat the company like a “personal fiefdom.” At Blue Cross Mississippi, the proxy policy has given the board total control and almost no oversight.
The composition of the board of directors hasn’t changed much this century, for example. From 2005 to 2017, there was just one addition: Mary Carol Pigott, the chief operating officer in 2005, became CEO and president and joined the board of directors by 2012. Richard John Hale, her predecessor as CEO, then became chairman of the board.
When Blue Cross converted from a nonprofit to a for-profit mutual company in 1995, it had a 15-member board. By the mid-2000s, it had only seven or eight members. According to the rules established in 1995, board members vote to appoint new members.
“It’s sort of like an old Soviet Russia election,” Bridgeland says. “The party tells you who to vote for. So there’s gonna be zero change.”
Blue Cross officials also declined to answer questions about why its board membership has dwindled over the years.
In order to guarantee an insurance company can pay out all the claims that could come its way, regulators establish a certain amount of capital they must hold, similar to a rainy day fund. The size of a company’s surplus is expressed as a percentage of the baseline requirement, called the risk-based capital ratio.
If the ratio is too low – meaning the company has fewer assets and more liabilities – the company risks insolvency and its customers could get hurt. But if the ratio is too high, the company may be hoarding customers’ cash with no benefit to them, especially if it raises their rates anyway.
At Blue Cross of Mississippi, the ratio stood at 1,578% at the end of 2021. United, the next largest insurer in the state, held a ratio of 1,078%, according to financial documents Mississippi Today obtained. The ratio for Ambetter, which sells plans on the health insurance marketplace, was 745%.
The Mississippi company’s surplus is significantly larger than those of its Blue Cross peers in neighboring states. Louisiana held a ratio of 944% at the end of 2021, and Arkansas of 751%. The for-profit Anthem Blue Cross & Blue Shield of Georgia held a ratio of 506%.
Officials at the state insurance department said there is no ceiling for the surplus, so Blue Cross of Mississippi isn’t violating any rules or laws.
"Blue Cross & Blue Shield of Mississippi’s financial strength, administrative efficiency and rating discipline are for the benefit of our Members and should not be used to mislead or distract from the issue and why UMMC made the decision to become non-network," Lagg said. "The issue is the cost and quality of health care services for our Members and UMMC’s outrageous demands which will only further increase costs unnecessarily."
But the size of the company’s surplus far outpaces industry averages. A 2019 report by the Vermont Department of Financial Regulation looked at surpluses held by 16 Blue Cross companies around the country. Mississippi’s surplus was the largest, at 1700%. The second-largest, in Idaho, was 1321%.
Ten of the companies held a surplus below 1000%. The average was 937%.
Blue Cross' unusually large surplus has held for years. From 2013 to 2017, Mississippi’s surplus never dipped below 1600% and was consistently the highest in the group the Vermont report studied.
Though Mississippi’s regulations haven’t stopped Blue Cross from amassing this rainy day fund, regulators in other states have imposed limits on insurers’ surplus levels.
The Pennsylvania legislature gave regulators the authority to review surplus levels at Blue Cross insurers, which are nonprofit, and require them to justify or reduce any surplus beyond a certain level. Most recently, that cap was set at 750% for larger plans or 950% for smaller plans, which experience more volatility and thus need a larger cushion.
The size of the company’s surplus “would suggest to me that there is available money here, that in the hands of good advocates, maybe ought to be addressed to health care needs,” said Walter Smith, executive director of the nonprofit group D.C. Appleseed.
Smith’s organization won a legal battle with a local nonprofit Blue Cross affiliate that had amassed “excessive” surpluses with a smaller pile of extra assets than what Blue Cross of Mississippi currently holds. The settlement agreement required the company to set up a $95 million fund to support public health in D.C.
Because Blue Cross of Mississippi is a for-profit company, it’s not directly comparable to the D.C. case his organization spearheaded, which involved a nonprofit founded as a “charitable and benevolent institution,” Smith said. But consumer advocates say if a for-profit company has a huge surplus, it shouldn’t need to raise rates, and in some states regulators could stop it from doing so.
But in Mississippi, state law prohibits regulators from using an insurer’s surplus level to justify approving or denying a rate increase. And moreover, the state insurance commissioner does not control rates on group and self-funded plans, according to Commissioner Mike Chaney.
“The only rate authority we have for Blue Cross and Blue Shield is for individual policies, and they have less than 30,000 people (with those plans) in the state,” said Chaney.
