G. Phillip Pope, president and CEO of BC/BS of Alabama, released a statement based on recent provisions in the U.S. Senate’s version of the health care reform bill.
“Experts project the pending healthcare reform bills will increase annual family premiums in Alabama by an estimated $2,800 for small businesses and by an estimated $3,500 for individuals who purchase new coverage within five years of enactment,” Pope said in the statement.
The findings are based on an October report from the actuarial firm Oliver Wyman, Inc. The report was paid for by Blue Cross/Blue Shield.
Reforms would require insurers to offer coverage on a guaranteed basis, without exclusions for pre-existing conditions. Koko Mackin, a spokesperson for BC/BS, said this would result in people waiting until they were sick to purchase insurance.
“The way the Senate bill is written, there is not a strong individual mandate or a strong incentive for individuals to buy coverage,” Mackin said. “What we need is for everybody to be in the pool that you’re insuring. That way your risk is spread among the larger population. If you allow individuals to buy their coverage on the way to the hospital, on their way to the doctors, on the way to surgery, you can see where the cost of the product would dramatically increase.”
The “individual mandate” referred to the penalty people would pay for not purchasing health insurance, which by 2016 would be $750. Mackin said healthy people could conceivably save money by paying the penalty until they needed insurance.
Other reforms mentioned in the report that may increase average prices on premiums:
• Discontinuing the practice of adjusting premiums based on health status and gender.
• Limiting how much premiums vary because of age, also called “age bands.”
• Selling only insurance policies that meet the new minimum benefit levels.
The Wyman report states that family premiums purchased through small businesses would increase 29 percent five years after reform. Individually purchased insurance for families would increase 69 percent in the same time period.
The figures from the Wyman report project the increase in addition to normal medical trends.
However, both individuals and small business groups have already seen premium increases in the last five years. According to Mackin, BC/BS small business group premiums have increased yearly by an average of 8.3 percent since 2005, for a total of 41.5 percent.
Individual plans had no premium increases in 2006, 2007 and 2008. The average of premium increases for 2009 and 2010 was 12 percent, a 24 percent increase in all.
President Barack Obama’s Council of Economic Advisers stated that health care spending would increase initially, with more than 30 million Americans gaining coverage, according to the Washington Post.
But they also said the Senate bill “would cut the soaring rate of growth in health costs by 1 percent a year over the long haul, reducing federal budget deficits and producing thousands of dollars in benefits for the average family.”
A fact-checking report done by The Post said both the Wyman report and another report done for America's Health Insurance Plans “underestimate” the buying power of individuals under the reform.
“…the reports underestimate the pricing power that individuals without employer-based coverage and small businesses would enjoy as a result of being pooled together for coverage, instead of buying on their own in highly uncompetitive markets, as they do today,” the report said.
It also pointed out that small business groups were already protected from coverage denial.
Both reports have come under fire from members of the Senate and the White House. In a CNN report, Democratic Sen. John Kerry of Massachusetts called the AHIP findings “significantly flawed” and said, “The insurance industry ought to be ashamed of this report.”
In a story on healthleadersmedia.com, a spokesman for Senate Majority Leader Harry Reid of Nevada said, “The insurance industry continues their ‘say anything’ strategy to deceive the public,” in response to the Wyman report.
According to the American Medical Association, BC/BS covered 89 percent of Alabamians in Preferred Provider Organization (PPO) or Health Maintenance Organization (HMO) insurance in 2008.
This was the highest percentage of coverage by a health insurance company in any state.
This number included people covered under the ALL Kids health insurance program.
Pope said in his statement that BC/BS was committed to improving healthcare for its customers.
“We fully support healthcare reform that improves the quality of medical care to all patients, reduces the overall cost of healthcare, and expands coverage to more Alabamians,” he said in the statement. “For more than 70 years, we have been working to make these types of healthcare improvements a reality in our state.”
For more information see:
Message from Blue Cross/Blue Shield CEO:
https://www.bcbsal.org/msgCEO.cfm
Wyman report
http://www.oliverwyman.com/ow/pdf_files/YBS009-11-28_PPACA120309.pdf
Washington Post fact-checker report:
http://www.washingtonpost.com/wp-srv/politics/documents/factchecker15.html
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