The Philadelphia Inquirer Jeff Gelles column: Consumer 10.0: From one health insurer’s perspective [The Philadelphia Inquirer]

Mar. 14--If you're a health insurer nowadays, chances are you feel cast as Snidely Whiplash. Just ask the folks at Philadelphia's Independence Blue Cross.

As the region's dominant insurer, Blue Cross is often in the crosshairs as health-care costs rise and policyholders struggle with higher premiums and co-pays.

Although it's a nonprofit, and lately a money-losing one, Independence Blue Cross gets jumbled together in the public's eye when one of its counterparts boosts premiums while profit grows, or when it denies care to a sympathetic sick person. You've probably heard how WellPoint Inc. recently raised rates on some California policyholders as much as 39 percent.

The latest insult came Monday at Arcadia University, when West Philadelphia author Leslie Banks introduced President Obama with a story about how her own premium -- from Independence Blue Cross -- recently doubled.

Obama, in what he hopes will be the final push for historic health-care legislation, said stories such as Banks' illustrate why change was urgent: As premiums relentlessly rise, more and more people can't afford them, and the pain of the uninsured continues to grow.

Still, it's enough to make an insurer feel vilified -- especially when politicians and journalists so often portray insurance companies as, well, villains.

I'm not here to defend health insurers. If I had my druthers, we'd be talking about a simpler, more straightforward style of health care, such as "Medicare for all."

Still, the nation is on the verge of a major shift that has been supported, if sometimes halfheartedly, by health insurance companies. Although cynics will say that's only because they stand to gain 30 million customers under Obama's current plan -- especially if a last-ditch push for a "public option" once again falls short -- the truth is more complicated. If nothing else, they realize that today's system is a mess.

To better understand their perspective, I checked in with Elizabeth Williams, vice president for public affairs at Independence Blue Cross and -- full disclosure -- a former editor at The Inquirer.

Whatever your feelings about the industry or the overhaul Obama is advocating, insurers have a clear window onto the state of U.S. health care. And if Obama's plan is enacted, they'll have a huge stake in how it plays out.

What Williams says she fears is that the will to fix the system has focused more effectively on expanding coverage than managing care and controlling costs.

"We are strongly in favor of reform. We are ready to commit to massive, massive changes in how we do business," Williams says. "But we are very worried that the current legislation will make health care more expensive, not more affordable -- the opposite of what people want."

Williams' biggest concern is what she calls a lack of teeth in the individual-mandate provisions of the overhaul plan -- especially penalties that top out at 2.5 percent of household income, which is likely to be much less than the cost of coverage.

No matter how much the details have changed over time and among various versions of the many proposals, the individual mandate has been a mainstay.

It has always been a hard sell -- who likes being told what to do, especially if it means spending money? Obama himself scoffed at it when he ran for the presidency.

But Obama came to recognize why it's an essential pillar of an overhaul that, whatever its more imaginative critics say, has always been envisioned as fixing the private market rather than replacing it with a "government takeover."

The overhaul rests on three such pillars: Bringing everybody into the system. Subsidizing premiums for those who can't afford them. And barring insurers from basing premiums on medical conditions or histories -- or rescinding coverage when people get sick or injured.

The goal, in its essence, is to share health-care costs as broadly as possible. But for it to work, the vast majority of people have to participate -- not wait to buy guaranteed insurance only as they come to recognize that they need it.

"We want to be able to make rates more affordable to people, and it's not possible unless younger, healthy people have insurance as well as older people who are more likely to get sick or who are chronically ill," Williams says.

Unfortunately, that problem is one that Independence Blue Cross knows firsthand. As one of Pennsylvania's "insurers of last resort," it provides the region's only "guaranteed-issue" coverage -- insurance that can't be denied based on a person's medical condition or history. In this region, 27,000 individual policyholders have Personal Choice guaranteed-issue plans.

Not all states have such plans. In many, a person with an existing condition can simply be refused. But as Leslie Banks and other policyholders know, a guarantee isn't any good if the coverage is unaffordable. Some were told that to keep comparable coverage, their rates would rise 75 percent.

In insurance, this is known as a "death spiral."

I disagree with Williams about the Obama plan's overall balance. Health-care experts say that its cost-control efforts are substantial and that it promises the opportunity to at least test virtually every good idea out there.

But Williams is right about this much: Getting everybody insured is an essential key to sharing costs.

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Consumer 10.0: What Health Overhaul Would Do

President Obama is urging Congress to pass health-care changes. Here are key elements of the plan he seeks:

Requires citizens and legal residents to have health insurance. Imposes phased-in tax penalties for those who don't.

Penalizes large employers that do not offer group coverage.

Offers Medicaid to those who earn less than 133 percent of the federal poverty level: for example, an individual earning up to about $14,400 a year or a family of four earning about $29,300.

Subsidizes premiums for those earning up to four times the poverty level (about $88,000 a year for a family of four) who are ineligible for Medicaid or an employer-sponsored plan.

Bars insurers from basing premiums on health status, denying coverage because of existing conditions, or rescinding coverage.

Allows premiums to vary based on age. Older people could be charged three times the amount charged younger people.

Bars annual and lifetime limits on coverage.

Requires insurers to cover dependent children until age 26.

Establishes state-based marketplaces, called exchanges, where insurers can offer plans that meet minimum standards. Each would have to offer at least one nonprofit multistate plan overseen by the federal Office of Personnel Management.Allows existing employer plans to continue, but bars annual and lifetime limits and sets some other minimum standards.

Caps annual deductibles and out-of-pocket costs in plans sold via exchanges.

Requires House and Senate members and staffers to obtain their own insurance through the exchanges.

NOTE: Not all provisions would take effect immediately.

SOURCE: Kaiser Family Foundation

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Consumer 10.0:

In the hot seat

IBC gets lumped in with other insurers.

Consumer 10.0, D2.

Contact columnist Jeff Gelles

at 215-854-2776 or [email protected].

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