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Wellmark Blue Cross and Blue Shield supports health care reform

Wellmark Blue Cross and Blue Shield strongly supports congressional passage of comprehensive health care reform which provides affordable, high-quality coverage to all Americans.

While Congress debates the various proposals, it is worth noting that there is broad consensus regarding several critical principles:

• Build reform on our current employer-based system that today serves 160 million Americans.
• Address the major drivers of costs to assure that care is affordable.
• Establish an effective “individual mandate” to enable health insurance reforms, including the elimination of pre-existing condition limitations and lifetime benefit caps.

Wellmark also supports targeted initiatives to expand Medicaid for our most needy uninsured citizens, and reform the Medicare payment system to reduce the geographical inequities that result in cost shifting to private consumers.

Readers might ask why Wellmark is concerned with how physicians and hospitals are reimbursed for the care they provide.

Because Medicare reimbursement for Iowa and South Dakota providers is so low, Wellmark chooses to increase its reimbursement to help make up the difference. We want to be able to attract and retain physicians and other health professionals to serve our members. In fact, we estimate that approximately 15 percent of our current premiums are used to help make up for low Medicare and Medicaid payments. This is also part of the reason Wellmark opposes a government-run health plan.

Setting the record straight

It’s time to set aside the rhetoric that characterizes all health insurers as villains, with huge administrative costs and double-digit profit margins. It’s simply not true.

Wellmark, in fact, is a mutual insurance company. We are owned by our members, not by shareholders. And the only Wall Street we care about is the one in Davenport. Or Sioux City. Or Deadwood.

Wellmark is also a good steward of members’ health insurance premiums. From 2006-2008, for example, 86.5 percent of every Wellmark premium dollar went directly to doctors, hospitals, pharmacies and other providers to pay for health care. Only 8.1 percent was used to cover administrative expenses, which are among the lowest in the industry. And our operating margin – our profit – was 0.7 percent, less than one cent of every premium dollar.

That’s exactly what our members should expect. After all, it’s their money.

Key concerns with current proposals

With all the talk of actuarial values, exchanges and tort reform, it can be hard for individual consumers to understand how the various proposals might affect your household. Here are five issues that could affect Iowa and South Dakota pocketbooks:

Weak individual mandate: A weak individual mandate, combined with proposed insurance reforms, means that people could wait to buy insurance until they need it, similar to buying auto insurance after the accident. This will make insurance more expensive for everyone.

 

Age rating: We use more health services as we get older. “Age bands” of 5:1 – meaning that the highest band will pay five times as much as the lowest band – are critical to ensuring that young individuals, whose premiums subsidize care for older individuals, choose to participate in the system. Some estimates indicate that changing the ratio to 3:1 would increase premiums for the youngest third of the population by 35 percent; a ratio of 2:1 would result in a 69 percent increase.

 

Minimum benefits: Current proposals would require insurance products to have a minimum “actuarial value” of 65 percent. The actuarial value measures a health plan’s worth, based upon its benefits and cost-sharing. Two health plans can have the same actuarial value, even if one offers more benefits by assessing higher deductibles.  Consultants estimate that a 65 percent floor for coverage will result in a 10 percent increase to average health insurance premiums. We recommend Congress lower the actuarial value for its lowest cost plan to 60 percent.

 

Insurer fees: A $6.7 billion annual health insurer fee, as proposed by the Senate Finance Committee, would increase family premiums by approximately $500 annually. This burden would continue to grow over time, as employers choose to avoid these charges by self-funding their health coverage.

 

Public plan: Wellmark does not support a public health plan to “compete” with private insurers. We feel a public option would critically erode the employer-based system, and undermine our efforts to improve quality and control costs. A public plan would also continue to underpay doctors and hospitals, ultimately reducing our access to quality care. In short, with a public option, we won’t have as good a system as we do today.

Insurance is only one aspect of how you measure a health care system

There is not enough discussion on reversing the unsustainable cost trend in our health care delivery system. We need to eliminate waste, use comparative effectiveness research to measure the value of new technologies, and promote clinical best practices. There should be established standards of care that all providers follow; currently there is considerable variation of practice patterns, even in states like Iowa and South Dakota that provide high-quality care.

If nothing is done to control the major underlying costs of health care, then any reform effort is doomed to failure.

Take the time to do it right, but keep moving forward

Wellmark continues to believe in comprehensive, bipartisan health care reform, and will do its part to contribute to this important debate. It is also our hope that consumers will take time to fully understand the issues and determine how they, personally, will be affected by health care reform.

Working together, we can create a better health care system for everyone.