DURHAM -- With COVID-19 cases continuing to rise in North Carolina, the leader of the state's largest health insurer says its costs will be larger than it originally anticipated.
Dr. Tunde Sotunde, the new CEO of Blue Cross and Blue Shield of North Carolina, said in an interview that he expects the coronavirus pandemic to cost the insurer more than $600 million.
The longer-term cost of the health crisis could be even larger, he said, if medical expenses rise because of it.
"Based on the resurgence just in recent (weeks), our modeling suggests that those numbers are probably more north of $600 million," Sotunde said of the company's financial forecast.
A large chunk of the costs -- more than $300 million -- comes from actions that Blue Cross NC has taken to increase care during the pandemic. The insurer eliminated member cost-sharing -- copays -- for COVID-19 screening, testing and treatment. It also expanded its coverage of telehealth services, which saw its usage double between February and March.
Blue Cross NC has also tried to ease cash constraints for its members and providers by extending grace periods on premium payments and increasing the speed of its claims payments. The insurer says 90% of its claims are now paid within 14 days.
"We did that because we wanted to ensure that our consumers and individuals had access to care," Sotunde said. "You've seen the numbers that we've seen around unemployment or folks being furloughed ... so we took actions."
Sotunde added that Blue Cross NC is in a position to handle those increasing costs. If needed, he said, it could always tap lines of credit, though it has financial reserves in place.
Sotunded called the pandemic "uncharted territory" for Blue Cross NC, and said no one could say with "any level of uncertainty that the worst is over."
"What is critically important (is) we know the actions that mitigate or reduce the spread," he said. "We know what works ... Wash your hands; wear face masks or face coverings in public; and wait six feet from from the next person."
Sotunde said it is still unclear how or if the increased costs from the pandemic might affect insurance premiums next year. In the past two years, he noted, Blue Cross NC has lowered premiums on products for those under age 65, and the insurer is committed to affordability.
"At the end of the day, the question is how deep (of a recession), and how long is it going to be?" he said. "So it's difficult. I don't think any of us, you know, has a clear line of sight. I think we have to follow things very closely, and then be extremely flexible."
Blue Cross NC is the largest provider of health insurance in North Carolina, serving nearly four million people in the state. It is the only insurer providing Affordable Care Act, or Obamacare, plans in all 100 counties in the state.
Sotunde has been leading Blue Cross NC for a little more than a month, having come to North Carolina from an executive role at health insurance company Anthem. Sotunde was chosen after Blue Cross NC's previous CEO, Patrick Conway, resigned under pressure last year after facing charges of driving while impaired and misdemeanor child abuse, The News & Observer reported.
Under Conway, the company instituted a new cost-sharing model with providers called Blue Premier, which includes a large amount of data sharing to improve care. Already, Blue Cross NC has partnered with five of the largest health care providers in North Carolina under its Blue Premier program to share data.
That is still a big priority under Sotunde, especially using data, machine learning and artificial intelligence to improve care. "So, for example, we (can) predict individuals that might be at risk of developing chronic conditions," he said, "and then provide them with information and support to prevent chronic conditions."
Sotunde said Blue Cross NC also remains committed to the Affordable Care Act marketplace. In the earliest years of the ACA, Blue Cross NC was the only insurer that never left the market in North Carolina, and it lost millions of dollars doing so.
It has stabilized in recent years, and some insurers have returned, but it still faces challenges. The Trump administration recently asked the Supreme Court to nullify major portions of the ACA, thus ending the insurance program.
Sotunde said he didn't want to comment on legal actions, but noted that Blue Cross NC believes ACA plans have "proven to be viable products."
"I wouldn't be surprised if more (insurers) enter into the 2021 marketplace enrollment, so that should tell you something," he said.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
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