Louisiana health insurance executive warns Senate plan won't cut costs
By: Health Insurance
Submitted: 2009-10-20 10:03:14 | Word Count: 804
The Senate Finance Committee's health care overhaul will not lower costs and will yield higher taxes that insurance companies pass on to policyholders, a top executive of Blue Cross and Blue Shield of Louisiana said Tuesday as the legislation moved forward in Congress."The affordability piece is not going to go away" if the Senate bill becomes law, Brian Keller, senior vice president and marketing chief for the state's leading insurer, said at a luncheon gathering of New Orleans economists and businesspeople.
The assessment generally echoes the findings of a PricewaterhouseCoopers study financed by the insurance industry and released Monday on the eve of the Senate panel's vote. Keller conceded that the analysis omitted certain provisions of the legislation, a point the White House and Democratic congressional leaders emphasized in their condemnations of the report.
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Keller said the national Blue Cross and Blue Shield Association plans to release its own study of Sen. Max Baucus' bill today.
Though he offered a relatively sweeping indictment of the legislation, Keller said he expects a compromise to reach President Barack Obama's desk, and he repeated that Blue Cross is willing to come to the table to expand coverage and lower costs.'Meaningful reforms'
Louisiana Blue Cross and Blue Shield CEO Mike Reitz has for months touted his support for "meaningful reforms," and the company's Web site calls for, among other policies, paying providers for performance rather than per service; covering pre-existing conditions; imposing an individual mandate for coverage; curtailing medical-related lawsuits; and expanding Medicaid and private insurance coverage via subsidies.
Reitz opposes a government-run insurance plan. A public option is a key component of House Democrats' main bill, but the Baucus version opts instead for insurance cooperatives that would initially be capitalized by taxpayers.
Keller said he does not believe a public plan will be included in the final version once the Senate and House reconcile their competing bills. But Keller said he could see the Obama administration trying again for the public option, particularly if the current legislation results in higher premiums.
"I think that's the goal," he said. "I can see them coming back in two years, saying, 'Those dirty insurance companies, they're charging us more. Now we're going to go with the public plan.' . . . I don't want to say they're sneaky. But they're strategic."
Penalty called too low
The Baucus bill falls short, Keller said, in enforcing an insurance mandate, assessing a penalty of $950 for a family that refuses coverage and $750 for an individual, when the fines are fully phased in by 2017.
The idea behind a mandate is to spread the risk over a larger pool while reducing the pass-along costs of defaulted emergency room bills of the uninsured. But Keller said the penalties aren't high enough to force people into the marketplace.
Keller also was not receptive to co-ops and easier access to insurance pools, including the prospect of allowing both concepts to cross state lines. Blue Cross is already structured as a co-op, he said.
He said widening the markets across state lines could initially offer greater access to individual coverage for high-risk people who cannot afford it now. But the cycle of competition, he said, would continue to weed out the highest risk patients, leaving a pool of uninsured who are too expensive for companies to cover.
"For (insurance) associations to work they have to be very large, " he said.
Though he did not explicitly refute his firm's endorsement of expanding Medicaid, he did note comments from several governors who have expressed concerns the changes would wreck state budgets.
Separately, Keller said Blue Cross and Blue Shield's enrollment numbers reflect a slowing Louisiana economy, particularly in the oil sector across the Louisiana coastline.
Keller said Blue Cross is losing about 1,000 enrollees each month from its group plans. The reductions, he said, are concentrated around Lafayette, Morgan City and Houma, all areas that lean heavily on direct and indirect oil and gas jobs.
Oil firms account for about 25 percent of enrollment in group plans across the state, Keller said, but in recent months have accounted for about half the losses in enrollees.
