Blue Cross and Blue Shield Plans

Blues Plans Support Universal Coverage Moves in States, With Some Caveats

Reprinted from the January 2007 issue of The AIS Report on Blue Cross and Blue Shield Plans, a hard-hitting independent monthly newsletter on business strategies, products and markets, mergers and alliances, and financing of BC/BS plans.

Blue Cross and Blue Shield plans across the nation could benefit from states' growing interest in universal coverage, according to Standard & Poor's analyst Shellie Stoddard. "The Blues are probably best positioned to become the administrators of universal plan designs." She cites Blues plans' involvement with the federal employees' program, and notes that "they tend to have the widest networks with providers across the state."

Plans are either proposing or closely watching states' legislative bodies introduce proposals to significantly expand coverage to the uninsured in 2007 and beyond. Following Massachusetts' universal coverage bill and subsequent state bills to expand coverage to the uninsured in 2006, more states are pursuing such legislation in 2007.

According to Richard Cauchi, health program director at the National Conference of State Legislatures, at least 20 states have indicated some intent to file or debate such proposals in 2007.

"What's happening is we've heard the governors speak at length. [And now] there are at least eight states that have created task forces to study the Massachusetts law from last year and to make recommendations to see how that state's plan can be modeled to their states," says Blue Cross and Blue Shield Association (BCBSA) Director of Research Sue Laudicina. Among the states that have created task forces or commissions to examine the issue are California, Colorado, Hawaii, Louisiana, Maine, Maryland, Minnesota, New Mexico, North Carolina, Ohio, Oregon, Rhode Island, Washington and Wisconsin.

"Last year was the first time in five years that states had healthy revenue growth," Laudicina explains. "At the same time, the National Governors Association pointed out that health care costs are one-third of all state costs." To help reduce the costs, states can develop mandatory programs like Massachusetts' or voluntary programs to reduce the uninsured, she explains.

States are now looking for health care reform partners. They are looking to partner with health plans and with employers, encouraging them to contribute to employees' health benefits, she says. About a dozen states passed such employer incentives in 2006, she adds.

Blues plans are taking an advisory role in guiding states on such legislation, Laudicina says. "A lot of our Blues plans are not leading the charge, but are seeing their role as responsible corporate citizens." She says some member plans find that not being active in legislation keeps the plan from choosing sides among the parties it serves. She points to CareFirst, Inc.'s decision not to become involved in the brouhaha surrounding last year's "Wal-Mart bill," which was enacted by the Maryland legislature, overriding a veto, but was struck down in courts. The bill would have forced employers with 10,000 or more employees to spend at least 8% of its payroll on health benefits.

Most recently, California Gov. Arnold Schwarzenegger (R) proposed on Jan. 8 a universal health care bill that the state's Blues plans are generally supportive of - albeit wary of certain of its initiatives. His plan would prohibit plans in the state from denying coverage on the basis of age and health status, and proposes a minimum medical loss ratio of 85%. The proposal mandates coverage for all Californians, and focuses on the 6.5 million people presently uninsured.

Blue Cross of California, a WellPoint, Inc. subsidiary, says it supports expanded coverage and issued its own universal-coverage plan on Jan. 8. Ann Kuhns, WellPoint's western vice president for state affairs, says that the insurer is "pleased to see the governor tackling such a high-priority, important issue to our customers." She adds that much of what was proposed is similar to Blue Cross of California's plan, but that there are some areas where the insurer doesn't agree.

The plan welcomes the governor's focus on healthy behaviors and healthy decision making, universal coverage for children, and expansion of State Children's Health Insurance Program to 300% of the federal poverty level (FPL), she says. However, the insurer is concerned about the governor's proposal for a minimum medical loss ratio of 85%, Kuhns says. She interprets that as an attempt to manage costs, arguing that "a fixed medical cost ratio works against high-quality products. And it's harder to meet that requirement if you are trying to offer affordable products." The plan also disagrees with the governor's proposed guaranteed health insurance issuance provision. Kuhns says "we think it could be very destabilizing and [could] deny benefit choices."

WellPoint Offers Expanded-Coverage Proposal

WellPoint also on Jan. 8 introduced its own proposal to provide universal coverage for children and to expand coverage for the uninsured through a blend of public and private initiatives and an increase in tobacco taxes.

To improve access to health care for children, WellPoint said it supports the expansion of state health care programs to cover more of the 9 million children who lacked coverage in 2006. The insurer urged states to expand coverage to children in families that earn up to 300% of FPL. The insurer also said states should include coverage for parents in families that earn up to 200% of FPL and for "childless" adults who earn up to 100% of FPL.

According to the plan, the proposed expansion of public programs and a strong outreach campaign could provide coverage to 25 million people now lacking health care coverage.

WellPoint also said it supports public-private partnerships that would help those who need premium assistance for private insurance but do not qualify for public programs, and it supports state high-risk pools to help provide coverage for those who are unable to purchase individual health insurance.

Oregon Blues Are Active in Coverage Bills

Oregon's Senate Interim Commission on Health Care Access and Affordability approved on Dec. 15 a universal health care plan it will submit to the 2007 state legislature. The proposal that will be submitted would distribute a health care card to each resident to buy a health care insurance package; require all individuals to participate or risk the loss of personal state income tax deductions; require employers and individuals with incomes greater than 250% of FPL to contribute money to the Oregon Health Care Trust Fund; propose a possible business payroll tax; and create greater provider cost transparency.

Regence BlueCross BlueShield of Oregon is participating in all of Oregon's major universal-coverage efforts, according to Mike Becker, director of public policy and community affairs for the health plan. He stresses that Regence supports achieving universal coverage, "but it is not enough that health care access be extended to include coverage for all uninsured - real reform will only be accomplished when we create an affordable, sustainable health care system built on the concepts of patient-focused competition, consumer choice and shared responsibility for health and wellness." He says the health plan further calls for "full transparency of provider quality and cost, accountability and re-engagement of the patient and physician in evidence-based health care decision making."

"The current health care system is broken and in need of major structural change," Becker asserts. He adds that all health care stakeholders, including Regence, have contributed to the problem. However, Becker contends that none of the Oregon health care reform proposals "is an ideal vision of a future health care system." The proposal that "expands access and comes closest to creating a fair market.is that proposed by the Oregon Business Council," he says.

Blue Cross and Blue Shield of Illinois developed a proposal that would require small employers to offer a basic insurance plan. But small employers wouldn't necessarily have to pay for it under the Blues plan, Laudicina says. However, "the state would provide state tax credits as an inducement." The plan has a proposal, she says. "They're saying, hey, we can make it easier for you to do the right thing."

CDH Takes Back Seat for 2007

As for state-based legislation on high-deductible health plans compatible with health savings accounts (HSAs), she says, "I think that's kind of last year's issue." HSA legislation, she says "is an issue that emerged two years ago, and [those products are now] selling in every state."

"There are some states where the creation of medical high-risk pools would be a good thing," Laudicina says. "In states like Arizona and Georgia, legislators made it clear they would like to set up a high-risk pool" and funding for the pool. "There will be a lot of effort in those states at least, and we expect that to go forward this year — hopefully" she says.

Laudicina says she's also expecting a "dozen states to pass" laws to facilitate greater transparency in the health care industry. She says it follows a trend that was established in 2006 when five states — including Colorado, which adopted a hospital report card law and Ohio, which adopted the Ohio Consumer Health Freedom Act — enacted such bills. "I think states will be looking at those two laws," she says.

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