What is BlueCross afraid of?

More BlueCross blog backlash: Juls Rosen at Working Californians posted her response to the BlueCross ads at dailykos.

At Calitics, dday agrees with our post that there will be a backlash against BlueCross:

There couldn’t be a more reviled corporate entity around these parts than Blue Cross, the team who systematically tried to throw any sick person off their rolls and reduce any effort to get them to actually pay for medical treatment, which after all is their entire job. … If Blue Cross is the face of health care status quo, I’d say change is a-comin’.

In a comment, Calitics guru Brian Leubitz asks, “WTF are they so scared of?” It’s an important question, and the answer suggests that $2 million in opposition might be a down payment.

Blue Cross blues: A review of their “coalition” website is clear about the many reforms that they oppose. The shocking reality is that the practices that consumers hate about insurance companies are actually legal:
* denying to sell people coverage because of their age or health status;
* cherry-picking, using different rates and marketing to avoid people who actually need care;
* diverting premium dollars from patient care to administration, marketing, and profit;
* selling scaled-back plans with limited benefits and high cost-sharing that don’t cover much;
* raising rates without explanation or justification.

They are directly attacking the proposals on the table, by the Governor, the Senate President Pro Tem, and the Assembly Speaker, all of which would set new rules and oversight to prevent at least some of these practices.

Health Access California is advocating for new or stronger rules on all these fronts, as well as for SB840, which would radically reduce the role of BlueCross and insurers in general. But even the new rules and reforms that are close to a consensus between the legislative leaders and the Governor would still change the business model that BlueCross relies on.

Two examples:
* The ad directly attacks “guaranteed issue,” since BlueCross wants the ability to continue to deny people because of their health status. It’s a lot more profitable to sell coverage only to people who won’t file claims.
* The website directly attacks setting a “minimum medical loss ratio” meaning that 85% of the premium dollar would go to patient care, rather than adminstration, marketing and profit. The fact that this is a common element of the plans of Schwarzenegger, Nunez, and Perata give BlueCross hearburn: BlueCross HMO has only 78.9% go to patient care; individual who buy the BlueCross PPO only have 51% of their premium dollar go to patient care.

How much money is at stake for BlueCross, the biggest of the California insurers? This San Jose Mercury News article tries to answer (boldface is mine):

How much money Blue Cross makes in California can be difficult to discern, but financial reports that the company files with the state give strong indications about its profitability. In 2005, it sent more than $500 million in profits to parent company WellPoint – the nation’s largest health insurer – from its California HMO business alone, which has about 4.5 million members. It reported profits of 10 percent – more than double the HMO profits of HealthNet and Pacificare, Blue Cross’ largest for-profit competitors.

Blue Cross’ margins on so-called preferred provider plans (or PPOs) – which are subject to less state oversight – are much larger. Documents from a Department of Insurance hearing last year pegged profits for such plans at an average 18 percent, compared with 5 percent for competitor HealthNet. For plans sold to individuals, Blue Cross’ profits averaged 27 percent, compared with 15 percent for HealthNet.

No wonder BlueCross likes the status quo, and seeks to block any change, including the ones in discussion now. The comparison to Enron becomes more and more apt.

(Thanks to Matt Ortega at Its Our Healthcare! for re-imagining the BlueCross logo.)

Health Access California promotes quality, affordable health care for all Californians.

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