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State Health Plan Crisis – Legislature not asking the right questions

Post on February 6, 2009 by Adam Searing 7 Comments »

In our video commentary this week, Adam Linker and I show you the General Assembly hearing this week on the state health plan crisis (a shortfall might mean 30% premium hikes and fewer benefits for employees). We want to know why no one is talking about NC Blue Cross.

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Comments (Closed):7

Doug Gibson
February 6, 2009 at 5:14 pm
My questions are about the issue you keep raising (or is it Adam Linker?) – the fact that BC/BS offers individual health plans that undercut what state employees would pay for their family members to join the state plan.

1. First, do I have that right?
2. Do we know what kind of financial hit the state system is taking from their competitive disadvantage?
3. Is this unusual? (Is it happening in other states?)
4. What’s the remedy? Wouldn’t lowering family member premiums cost the state health system even more?
Adam Searing
February 6, 2009 at 7:56 pm
1. Sure – anyone in the state is free to apply for an individual plan through Blue Cross. Unless someone is young and healthy – or willing to buy a plan with huge deductibles and co-insurance – it is likely to be fairly expensive.

2. We don’t know what the exact effect is of Blue Cross cherry-picking the healthier and younger folks in the state who might normally join the state health plan. The General Assembly could direct its consultants to ask that question directly but at this point the political power of Blue Cross makes that unlikely.

3. We are looking at other states and will be reporting on that soon. I know we are one of the very few states where we don’t contribute to the dependent premium. And one of the very few states where we don’t ask for some premium from employees.

4. We need to look at some more innovative solutions here. NC Blue Cross is a nonprofit that made over $100 million in profit last year and has $2 billion in reserves. We don’t know what the terms are in the state contract or what percentage of last years’ profit is from the state contract, but that would be nice to know. Perhaps some of that money could be used to help the state plan. Blue certainly had no problem sponsoring the inaugural ball this year with some of its profits.

We could also require that NC Blue Cross and other insurers in North Carolina all charge the same premium based on age and be barred from considering any other health conditions – this is called community rating. This would remove the incentive for insurers to try and cherry pick the healthiest people.

We also need to get a handle on health costs for everyone. We’ve proposed an evidence-based medical institute here in NC to lay out what is the most appropriate care. Check out our health plan at http://www.nchac.org.
Doug Gibson
February 6, 2009 at 10:02 pm
“Unless someone is young and healthy – or willing to buy a plan with huge deductibles and co-insurance – it is likely to be fairly expensive.”

So – just so I’m clear – the BC plans for the young and healthy are cheaper than what the state charges to enroll young, healthy family members, and yet have comparable benefits. But as you get older and less healthy, the state plan becomes more competitive.

Also, though, it sounds like employees pay no premium, but the premium for enrolling family members is unusually high. Who makes that call – the state or Blue Cross as administrator of the plan?
HealthCare-NOW
February 7, 2009 at 1:06 am
Greed + Incompetence + A Belief in Market Efficiency = Disaster
Adam Searing
February 7, 2009 at 8:43 am
That’s right – the insurance industry tries to enroll the youngest and healthiest people it can – that way profits are higher. The state plan takes everyone who works for the state regardless of their age or health condition. That leaves more younger and healthier people for private insurers to cover. This is exactly why we need reform – private insurers shouldn’t benefit through taxpayer subsidies.

Yes, state employees pay no premium. But, look at the cost sharing. That’s really where they’ve made it back. Take an example – in the standard plan there is a $300 deductible, 20% cost sharing (max of $1750) and a $150 inpatient hospital co-pay. And that deductible and cost sharing is each benefit year. A slightly complicated pregnancy would easily exceed those amounts. So, if it takes place over two health plan years – which happens all the time – it can easily cost the state employee $4,250 out of pocket just to have a baby.

That’s not a plan to write home about.
AdamL
February 7, 2009 at 9:50 am
Also, if we increase dependent premiums now, it will drive even more state employees to buy coverage for their family members through Blue Cross on the individual market.

That means that the savings from moving state employees to the Blue Cross network were overestimated. The administrative costs for moving state employees to the Blue Cross network were underestimated.

The result of having to pay Blue Cross more money than we expected is that we will now increase dependent premiums and give Blue Cross even more business. Something just doesn’t add up here.
Marsha V. Hammond, PhD
February 14, 2009 at 11:10 pm
Amazing discussion. The video indicates that no information is available re: the administrative costs that BCBSNC makes.

THAT’S AMAZING. There is a committee within the NC State Legislature that oversees BCBSNC —-a ‘non profit’

As a person who pays, along w/ the other 2 members of my family unit, all healthy people, $750/ month/ w/ $2500 deduct for anything other than seeing a doctor or obtaining prescriptions, I find it laughingly deplorable that so few questions are asked by the TERRIFIED State Legislators to BCBSNC.

My representative, Susan Fisher’s office, advised me to ‘lay off’ the NC Department of INsurance as there would be no answers coming from my persistent questions about why there are no REIMBURSEABLE screening colonscopies for BCBSNC recipients in western NC when colon cancer screening is the law (you have to meet the $2500 deduct first; a screening colonscopy is approx $1200). There are no mammograms paid for.

So, I started some research re: just who in the state legislature is receiving benefits from NC BCBSNC such that they are all petrified of standing up to BCBSNC.

This is what I found:

*BCBSNC Spent 18 Million trying to convert to to for profit status in 2002-2003. Since that time they have simply been saving up their money such that they are now the 3rd most wealthy Blue entity in the US. there are 29 BCBS entities in the US.

*BCBSNC has its own way of calculating how much in reserves it needs and it is not in keeping w/ the insurance industry standards

*NC State Legislators get FREE BCBSNC health insurance

*Total membership: almost 3.3 million people;8 million people live in NC; therefore roughly one-third of the population is saddled w/ BCBSNC (you’d think that the state legislature could attend to the people that they supposedly represent)

*Premium costs: increased 35% from 2006-2007

*BCBSNC, not to be undone by the NC State Legislature which forbid it becoming ‘for profit’ continues to launch ‘for profits’ units: “Blue Cross and Blue Shield of North Carolina has formed a for-profit subsidiary called NobleHealth”

*Even though BCBSNC is supposedly monitored by the NC State Legislature, in 2006, they stopped making quarterly earnings announcements (as they moved forward with their ‘non profit’ wealth

Why was BCBSNC allowed by the NC State Legislature to hoard so much money and increase premiums at the same time?

more info here:

Marsha V. Hammond, PhD: Clinical Licensed Psychologist, NC
blog on BCBSNC: http://madamedefarge2scutinizingbcbsnc.blogspot.com/