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Blue Cross criss crosses myths and facts

The Blue Cross and Blue Shield of North Carolina misleading health reform website has a nifty little link that promises to sort out “health care reform myths vs. facts.”

This is actually a great section of the website if you read “fact” every time you see “myth” and “myth” every time you see “fact.” Let’s take a look.

First “myth”:

Prevention and wellness efforts do not impact health care costs.

Again, if you read that as fact then Blue Cross is absolutely correct, wellness efforts do not impact health care costs. But don’t take it from me (or Blue Cross). Instead, here’s what the nation’s leading health care economists say (in a recent Fortune magazine article):

The main reason is something Victor Fuchs, a health economist at Stanford, pointed out long ago. The bulk of most people’s lifetime health spending comes in the last five years of life, when one body part after another begins to crumble, often in tandem. That’s when we roll out the heroic medicine, as endlessly inventive technology is applied to stave off the day of death. Nothing on the prevention agenda alters this end-of-life dynamic.

“Prevention gives you a better quality of life,” says Uwe Reinhardt, a health economist at Princeton, “but I have never seen any analysis that shows that in the long-run a society that uses a lot of prevention will have lower health care costs.”

Second “myth”:

Private health care insurers hold an unfair monopoly on health care insurance.

I think this is an attempt to say one of two things (it’s not clear): either Blue Cross does not have a monopoly on the health insurance market in the state or that the monopoly is not “unfair.” The numbers, which Blue Cross does not include on its website, speak for themselves. Blue has 96.8 percent of the individual market. That’s a hair away from total control.

Now, is the monopoly unfair? Blue Cross received big tax breaks for much of its history, which allowed it to gain an advantage over other health plans. It also built enormous political power so that — for example — it can obtain no-bid contracts from the state.

Most of us would say that a little competition is in order.

Third “myth”:

Employer-based health coverage is unpopular and on the decline.

I don’t think anyone has ever claimed that employer sponsored insurance is unpopular. And most policy makers want to build on the employer-based system. But Blue Cross only uses the offer rate to claim that employer-based insurance is not on the decline.

Here’s what the North Carolina Institute of Medicine says:

Even though ESI [employer sponsored insurance] is the largest source of health insurance coverage, the proportion of individuals covered by ESI has steadily declined over the past few years. In 2000, the ESI coverage rate for all North Carolinians was nearly 68%; today it is six percentage points lower. There was a similar drop among full-time workers, from 79% in 2000 to 74% in 2004.

The above quote is taken from the NC IOM report of the North Carolina Task Force on Covering the Uninsured. Barbara Morales Burke, who now works for Blue Cross, served on this task force; Bob Greczyn, CEO of Blue Cross served on the task force; and Andrea Bazan, corporate board member of Blue Cross served on the task force. If Blue Cross honestly thinks that ESI is not on the decline in North Carolina all of these people should have objected to the NC IOM printing such blatant misinformation.

Fourth “myth”:

Most workers aren’t happy with the quality of the health coverage they receive from employers.

I’ve never heard someone make this claim. But Blue Cross does have a point here, most people like the coverage they have at work. That’s why there would not be an exodus to a public plan even if it were open to everyone.

Fifth “myth”:

Government programs don’t impact the cost of private care.

The claim here is that Medicare and Medicaid underpay doctors and hospitals for services and that private insurers are forced to overpay so that those doctors and hospitals can still make ends meet. Blue Cross likes to claim that there is $88 billion in cost shifting from public programs to private insurance.

So where does the $88 billion figure come from? Here’s the first sentence in the study:

At the request of America’s Health Insurance Plans, the American Hospital Association, the Blue Cross Blue Shield Association, and Premera Blue Cross, Milliman has prepared this comparison of hospital and physician payment levels among Medicare, Medicaid and commercial payers.

That’s right, it’s a Blue Cross study. Milliman tries to capture the national dynamic but it’s difficult since payment rates vary drastically by region. North Carolina, for example, has pretty good Medicaid reimbursement rates, which allows programs like Community Care of North Carolina to thrive. Also, because Blue Cross contracts with providers are strictly confidential we don’t know how much Blue Cross pays to hospitals and doctors in our state.

Plus, commercial insurers should reimburse more because they cause bigger headaches for providers.

Sixth “myth”:

Most employees would rather have a higher salary than employer-provided health coverage.

Never heard this claim either. Although some people (especially young, healthy people) would probably prefer a higher salary if their employer is only able to offer some sieve-like insurance plan.

Now, I probably don’t have to tell you that Blue Cross executive know a great deal about health care in our state. They are not accidentally posting false and misleading information on their website. They just call myths facts and facts myths because they know they can get away with it.

That’s why we’ll call out every lie — for whatever it’s worth.

6 Comments

  1. Shawnna

    July 17, 2009 at 2:55 am

    I applaud you for what you’re attempting to do here.

    However, I think you missed the mark a bit with respect to your commentary on “government programs don’t impact the cost of private care”.

    The underlying premise of the Milliman study sponsored by the America’s Health Insurance Plans, the American Hospital Association, the Blue Cross Blue Shield Association, and Premera Blue Cross, is to try and convince us that if Medicare and Medicaid paid their fair share, it would go a long way toward solving the access to health care problem we have in this country.

    Hogwash.

    The US already spends significantly more than many other industrialized countries. And we certainly have nothing in the way of better outcomes to show for it.

    According to this 2008 Commonwealth Fund report – “Why Not the Best? – Results from the National Scorecard on US Health System Performance, the U.S. now ranks last out of 19 countries on a measure of mortality amenable to medical care, falling from 15th as other countries raised the bar on performance. Up to 101,000 fewer people would die prematurely if the U.S. could achieve leading, benchmark country rates.

    http://www.commonwealthfund.org/Content/Publications/Fund-Reports/2008/Jul/Why-Not-the-Best–Results-from-the-National-Scorecard-on-U-S–Health-System-Performance–2008.aspx

    I believe private insurance companies have contributed significantly to this situation by the approach they’ve used for contracting with hospitals, doctors and other health care providers. Instead of negotiating reimbursement rates designed to cover costs plus a reasonable profit margin, the private insurers approach is to negotiate rates to support whatever insurance premiums they feel the ‘market’ would bare. The ‘market’ being employers, individuals and other entities who buy their health insurance products.

    Whenever I consider the various methods and tactics proposed for health reform, I ask myself if they will lead to better outcomes. And the answer so far has been ‘it’s hard to tell’.

    I do believe a public option designed to compete against private insurers is probably a good first step. Insurers need to be held accountable for what they’ve contributed to this bloated, dysfunctional health care delivery system we have today.

  2. Quizzical

    July 17, 2009 at 9:36 am

    Shawna — Let me get this straight: insurers should pay rates “designed to cover costs plus a reasonable profit margin” rather than “negotiate rates to support whatever insurance premiums”..the market would bare (sic).”

    So you’re saying that private sector, for-profit doctors should simply be allowed to list a fixed cost, add in a comfortable profit margin, and insurers should blindly pay the total, even it the businesses/individuals who fund the system can’t possibly afford it? Clearly, you’ve never spent a nanosecond working in the private sector. That just ain’t how it works.

    Doctors’ offices, like any other business, compete for finite resources. In my experience, doctors rarely know what their services (or those they recommend) actually cost, which is part of the reason that medical inflation is so out of control. The pretense that health care dollars are infinitely elastic is clearly over. Either doctors learn to compete on both cost and quality or we’ll face draconian rationing that limits services to pay the same fees to both efficient and inefficient doctors. Is that REALLY the system you want?

  3. Quizzical

    July 17, 2009 at 9:39 am

    What

    I believe private insurance companies have contributed significantly to this situation by the approach they’ve used for contracting with hospitals, doctors and other health care providers. Instead of negotiating reimbursement rates designed to cover costs plus a reasonable profit margin, the private insurers approach is to negotiate rates to support whatever insurance premiums they feel the ‘market’ would bare. The ‘market’ being employers, individuals and other entities who buy their health insurance products.

  4. AdamL

    July 17, 2009 at 11:33 am

    I’m not smart enough to follow this conversation. My only point is that the study is suspect b/c it was funded by insurance companies and does not include some pretty important information.

    For example, reimbursement rates vary by state so just looking at the national cost shifting is misleading. Also, Medicare and Medicaid have a variety of reimbursement methods including extra payments for teaching hospitals and Disproportionate Share Hospital payments that aren’t included in this study.

    And the government might pay less for services but it also gives hospitals gigantic tax breaks, and, in the case of hospitals like UNC, actually appropriates money to them to help cover expenses.

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