Good morning. This week we are sharing important information with our customers, legislators and industry partners about the proposed health care reform bills emerging from the Senate Finance Committee. The fact is, because Empire BlueCross BlueShield covers almost 6 million New Yorkers, and have been here for more than 75 years, we are in a unique position to provide a historic perspective and information to help the key stakeholders in the health care reform debate understand the facts necessary to get reform done right. And it's important that all of you, as representatives of the industry as well as individuals impacted by the outcome, have the information as well.
I want to share with you the important opportunities - and issues of factual concern - in the current healthcare reform debate. A report posted last week by WellPoint highlights specific cost impacts for individual and group private coverage premiums that cover the majority of Americans today. The report covers each state in which there is a Blue plan affiliated with WellPoint and was based on a detailed review of all available reform bills and their recent amendments by our actuarial team. The large data base used was the actual coverage costs of groups and individuals in these states. The costs discussed are real impact numbers for health benefit plans if the reforms proposed today were implemented. I had the opportunity to visit with Fox Business Network while in Washington DC this week to talk about the current proposals and sensible health care reform.
PROPOSED HEALTH REFORM BILLS INCREASE COST OF HEALTH COVERAGE FOR MOST NEW YORKERS
New York is in WellPoint's analysis and Empire BlueCross BlueShield completed additional New York-specific review. What is concerning about the proposals (and consistent with the emerging reports from both independent and various Federal government sources) is that the underlying health premium costs will actually increase for most types of private coverage purchased by individuals and small businesses. The underlying costs of new policies issued under the reforms currently proposed in the Senate would be more expensive, not less. The data clearly shows that, while some individuals who are eligible for a subsidy because of their economic status would see lower premiums because the subsidy covers the increased costs, virtually all other individuals and small businesses would incur increased costs.
Proposed taxes and fees on health insurance benefits and healthcare providers would add a minimum of 4 percent to the cost of every health insurance policy in New York on top of some of the most expensive rates in the country already driven annually by rising hospital, medical, drug and other care cost.
The premium for Empire's least expensive and most popular individual policy, a hospital only plan with no limits for catastrophic hospital care, would jump 82 percent to conform to requirements under reform as proposed for new policies. Even the richest New York plans that already include most reforms proposed for the rest of the country would see an increase for all but those who are subsidized.
Small company group coverage health reform costs would increase premiums by 6 percent.
In addition, over 60 percent of Empire's large employer and union plans would be subject to the "Cadillac" tax on richer benefit plans by 2018, adding 10 percent by that time to the cost of their benefits despite an adjustment for being a high cost state.
These increased costs reflect only the changes related to insurance reform and it's financing. Cost shifts to private coverage from other government cuts, or other factors, while probable, are not factored in and would be further increases.
And, as important as the cost impact, the proposed legislation makes no significant progress getting more New Yorkers covered.
We have a decade of New York experience with similar reforms to those proposed by Congress, with no effective mandate to purchase coverage and increasing health insurance taxes and fees. The results of this experience reflect that the cost of coverage escalates when there is not an effective mandate for everyone to obtain coverage and taxes and fees are added to the cost of coverage to fund various Government programs. Fewer businesses and individuals purchase private coverage and enrollment shifts to high cost Medicaid coverage, further increasing State funding burdens. In turn, too many people delay needed services, resulting in increased costs for urgent care for hospitals and physicians when care becomes critical.
REFORM DONE RIGHT COULD REDUCE THE COST OF COVERAGE FOR MOST NEW YORKERS, AND COVER MORE OF THE UNINSURED THAN CURRENT PROPOSALS
One, single, broadly misunderstood feature in President Obama's list of key health insurance reforms is a mandate that everyone purchase some form of basic health insurance coverage. The presence of an effective mandate - alone - would reduce the cost of individual coverage in New York by over 60 percent and enroll 8 times as many New Yorkers in coverage than today because of improved affordability. The current proposals in Congress have modified this important feature of reform so much that New York will miss this opportunity to fix the one feature of its important consumer protections that would have the most impact on lowering cost and getting more people covered. This is a lesson we have already learned in New York that we can help other states avoid. An effective mandate would help to keep the rest of the country from wasting billions of dollars implementing well-intended guaranteed issue insurance rules without the main feature that would make it affordable, and get more Americans covered.
Exempting certain individuals from the mandate reduces both the cost of the government subsidy and the overall short-term cost of reform. Moreover, reducing the penalty for those that can afford coverage minimizes the incentive to obtain coverage. The result is that this partial reform covers fewer Americans and increases the cost of coverage for all those who do purchase insurance.
Rather than exclude the group that arguably most needs access to coverage, Empire and WellPoint are committed to working with all stakeholders in the debate to introduce solutions that would allow effective reform this year. In addition to restoring an effective mandate, there are other steps worthy of discussion that could make the insurance reform provisions of health care reform meaningful, effective, and less expensive for both the Federal government and the majority of Americans who already have coverage. One such way is to target the uninsured with a more affordable;"essential", yet comprehensive, benefit plan that is uniform in design, supersedes all state mandates, and becomes the basis of the mandated coverage.
This would make coverage more affordable, and also decrease the cost of government subsidy required to get more Americans covered than presently proposed bills.
Thank you for your time and attention,
Mark Wagar,
President
Empire Cross Blue Shield
Services provided by Empire HealthChoice HMO, Inc. and/or Empire HealthChoice Assurance, Inc., licensees of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield plans. The Blue Cross and Blue Shield names and symbols are registered marks of the Blue Cross and Blue Shield Association.
