BCBSNC makes national news

Whenever my feed reader serves up national coverage about North Carolina, it's rarely good news. Today's column in the New York Times by Paul Krugman is no exception. Blue Double Cross.

On Monday, just a week after the White House photo-op, The Washington Post reported that Blue Cross Blue Shield of North Carolina was preparing to run a series of ads attacking the public option.

In previous lives, I've generally admired Blue Cross & Blue Shield of North Carolina. Over the years, I've done contract writing for them, and I used to be an employee of the PR firm doing the ads in question. One of my neighbors, Tom Rose, was CEO back in the 80s. He's a good guy.

Until recently, I even imagined that the Blues might be part of the solution to our nation's health care challenges. They have smart people who understand more about practical operations of health insurance than all the rest of us put together. I had been hoping that they would focus their intelligence and energies on the greater good instead of their own corporate and personal fortunes. That hope has been dashed.

I don't know exactly what happened or how, but it seems the natural instinct of institutions to self-perpetuate converged with natural instinct of individuals to protect their own financial interests to create an unimaginable Blue mess.

Which brings me to this excerpt from the Blues annual report.

We also believe the coming year will provide a real opportunity to extend health coverage to every American. Blue Cross and Blue Shield of North Carolina will be a constructive part of the discussion.

If this is what passes for "constructive" in the insurance industry, it's no wonder things are so screwed up in our healthcare system.

Maybe this embarrassing week will serve as a wake up call for the leadership at BCBSNC. But I'm not holding my breath.

Comments

"Good" News

The "good" news in all of this is that you are paying for this James. You see the State Legislature just recently passed a bill that pays Blue Cross Blue Shield a pretty big chunk of change and lets them charge the families of state employees and teachers a boat load of money without any shred of oversight from the state.

So while they might claim they are a business protecting their profits, and the NC Legislature might agree, they are actually a non-profit that made $180 million last year. And now they are using the money that North Carolina taxpayers have given them in tax breaks and unquestioned giveaways to attack the President.

"Keep the Faith"

I'm with you there James.

I'm with you there James. As much as I'm a pretty serious critic of the company, I'd still like to see them at least sit at the table to craft a compromise on reform instead of spending our premium dollars creating misleading ads.

So sick of this

I am covered by BCBS through the State Health Plan. The greed and corruption with this company and the Legislature is sickening. Blue South is absolutely right about the not for profit facts. Our health plan was ground into the dirt but the CEO was paid $4 million dollars....

Dr. Roper speaks out

Courtesy of Progressive Pulse and NC Justice

A must read by Rob Schofield

At NC Policy Watch, calling on the Blue board of directors to rise to the occasion and take its governance responsibilities seriously. A well written piece, as always.

We can only hope the Powers the Be will take notice.

you gotta see this...

...from their point of view.

while a public option (or "single-payer") might make great sense to consumers and those charged with maximizing value for the healthcare dollar, you must understand that this is literally life and death for the health insurers.

i mean, let's get real for a second.

if a public option passes, there will be no "employer-based" coverage offered by anyone.

that means everyone, and i mean everyone, will move to the public option--and it's not likely to take longer than a year or two.

so where does that leave bcbsnc?

fighting for the only business left--administering the tricare and va programs (maybe...), and medicare supplemental insurance.

for the insurers, this is the death penalty; and you should expect that all tactics, rightly or wrongly, are on the table.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

Except

BCBS is a non-profit. They shouldn't be concerned about the profits they will lose from a public option.

If this was someone like Cigna it would make sense to say that they have a business to protect. But BCBS isn't supposed to be a business.

"Keep the Faith"

Is there an expert in the house?

What would BCBSNC have been able to do differently if it had succeeded in changing its corporate status to for-profit? Is the organization non-profit or not-for-profit?

Here's what the Independent said about it in 2002.

Discussing the potential conversion of his company from nonprofit to for-profit status, Greczyn's tone is firm, but soothing. The change will mean long-term stability for Blue Cross, he says, by allowing the insurer to raise needed capital on the stock market to keep up with for-profit competitors. Under the requirements of state law, it also will mean creation of a foundation with a potential $3 billion in assets dedicated to the health-care needs of North Carolinians.

Greczyn says Blue needs to go for-profit in order to survive over the long haul. Company finances are healthy--for now, he says. "But conversion is not about what will happen to this company this year or next. It's about a long-term vision. This is a unique opportunity to help secure the future of a health insurer that's based here. And to create a foundation to help needy citizens."

If only it were that simple. But a look at conversions of Blue Cross plans in other states offer scenarios that aren't quite so rosy. Take Virginia for example. In 1997, Virginia's Blue Cross converted to a for-profit called Trigon and put $175 million in a state-run trust fund as repayment for the value created during its years as a nonprofit. This past July, Indiana-based Anthem Inc.--a company that's been gobbling up Blue Cross organizations across the country--purchased Trigon for $4.2 billion. The loss of public assets in the deal? A whopping $4.1 billion.

Could the state of North Carolina buy BCBSNC and operate it as the public option? What would be the price? Who would get the proceeds?

Could the management team at BCBSNC and other insurance companies that aren't for profit be "hired" to plan and execute the public option? Could their payout over the next thirty years be tied to the performance of that option?

Some more stuff about non-profits and not-for-profits:

A banker's point of view

IRS version

Not an expert

But their documents with the Secretary of State say they are a nonprofit. I can also tell you that they proudly list a profit of 180 million dollars for 2008 on their website. If they had changed a few years ago it would have allowed them to pay out their profits to shareholders.

I assume the state could in theory buy it, but I don't know how that would work or who they would buy it from.

"Keep the Faith"

profit or non-profit...

...they don't want to die, and this, for them, is death--and they know it.

when it's over, the staff is going to be unemployed, bottom to top; and while they maybe "should" accept that and move on, they probably won't.

an analogy: if you tried to "obsolete" the catholic church, they'd also be likely to fight it tooth and nail, and they're also not a "business".

every insurer knows that a public option is a disaster for their business model, profit or "non-profit" and it should not be surprising that they will do anything to fight this.

(by the way...does "non-profit " mean you have to distribute the "profit" to the staff so that you break even?

"i had to be paid a million dollars...otherwise we would have made a profit, and we can't have that, can we?")

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

there's a huge problem in all of this...

...the point of reform is to insure the uninsured, make coverage fair for the currently insured, and to take the burden of healthcare spending off of business (although to be fair, some might say the goal is to make all businesses pay equally for a share of healthcare costs).

so reform passes, a public option exists, and business stops offering health insurance--all of which is expected behavior.

but here's the problem: everyone now needs to pay the premiums on the new insurance...and they aren't getting a pay raise to make that happen.

first question: do people realize they are going to have to pay thousands of dollars a year to be insured...or they won't be covered at all?

second question: will we inadverdently end up with more uninsured than we have today?

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

Business should not be the channel for health care

Health care should be paid for by broad, progressive taxes. If schools are important enough to be paid for by taxes, and wars are important enough to be paid for by taxes, and health benefits for Congress are important enough to be paid for by taxes, then health care should be important enough too. No?

we spent nearly $3 trillion...

...on health care in 2007, and if the idea is to transfer that onto the budget, it is going to be one of the toughest "sells" in american history.

i'm all for something, and probably single-payer...but you better be ready to explain why an income tax rate that looks downright european is a good thing.

if we cannot cut health care costs, we're looking at $10,000 per person per year; a 20% decrease, $8,000. tell a family with $50,000 of annual income that that's coming out of their taxes, and we have a major political problem.

and if they don't get health insurance unless they can pay the premiums...we may actually have fewer insured than today.

ione solution might be to raise taxes on business to cover some of the costs--but to the extent you do, you'll lose the support of business.

as much as i want this to happen, i have yet to figure out how to sell it against the "swedish taxes" argument...and when you look at how the congress caved on gitmo, how much courage should we expect from them on this?

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

I've given up worrying about selling things

You're probably right about the obstacles you've outlined, but as you said, we're spending two or three trillion already, isn't it just a matter of moving who spends what?

In problem solving like this, having a coherent view of the desired endstate seems like the right starting point. That should include a clear view of the natural distribution of responsibilities. In my mind, no case can be made that employers have any natural responsibility for health care. That's one of the many flaws of the current model..

Other flaws here.

the reason i bring this up...

...is beacuse i'm trying to think about the counter from insurers, and i suspect it's going to be something like "let us bid on providing the public option--at a profit, of course--and all will be well, because all this will be safely in the hands of the "economy", not "gubmint"".

if that happens, we probably have made no gains for the effort...so in the end, we better come up with some compelling ways to explain that all that "gubmnint" spending is a good thing.

one other comment: the very best thing insurers could hope for is a public option that does not take advantage of the savings "gubmint" can bring to bear, making the public option no more advantageous for consumers than the coverage in the private markets today.

look for a lot of lobbying to try to make that happen.

"...i feel that if a person can't communicate, the very least he can do is to shut up." --tom lehrer, january 1965

In NC

we have a not-for-profit (BCBSNC) corporation with 50+ share of the market and heavy reliance on government contracts for its market share. If there were ever a place for a breakthrough this is it.

Plus we have the university system and its medical centers.

Plus a dean of one of them who's really interested in this. A Republican progressive.

Classic

one solution might be to raise taxes on business to cover some of the costs--but to the extent you do, you'll lose the support of business.

I am a business owner and I can tell you that businesses don't pay taxes. Sure, we may cut the check, but the cost of taxes is borne by the consumer through higher prices and the employee through lower compensation. "Raising taxes on businesses" is just another way to raise taxes on the individual- the only entity who ever pays taxes.

First Step

The first step is to get a bill passed to say that if you want to provide health care to the state of NC you can't pay your executives over a certain amount.

The top 2 execs made about 7 million dollars in 2008. If BCBS NC was a private company Bob Greczyn would be the 9th highest paid health insurance executive in the country at his current salary.

Why are we the taxpayers paying for the CEO of a company with 2000 employees over 25 times what the Governor makes? And yes, every single one of us are paying his salary.

"Keep the Faith"

My first step

would be to repeal the NC prohibition on association's offering pooled health insurance.

The left, right, and center should all be able to agree that they want to offer this to their members. The state's chambers of commerce, the non-profit associations, etc. would save greatly - and increase and retain membership - if they could offer major medical as a member benefit as done in most other states.

The state of NC allows this for workers' comp insurance, but not for major medical. It's crazy that this is not allowed.

It truly is a quick fix that would benefit businesses, associations, and most of all PEOPLE.

Take a look at one of Maine's options.

 

Great Idea

I would add in that we should allow associations to band together.

I'm thinking of all the small non-profits with 1 to 5 full time employees who could help each other out.

"Keep the Faith"