Blue Cross Blue Shield Is Not Fooling Anyone

September 20th, 2010

I had to read these articles several times before I figured out what gave me that queasy feeling, like I just ate something slimy. Blue Cross Blue Shield of North Carolina (BCBSNC) is a master of spin. Maybe that’s what caused the queasy feeling–too much spin.

Without retracing too much history, I’d like to start less than a year ago, in October 2009, when BCBSNC (a “nonprofit” organization) actively fought against health care reform. They sent mailings and made 100,000 robo calls to North Carolina residents asking for help to defeat health care reform. The calls were in violation of state law, and BCBSNC paid a $95,000 fine. (Chump change for a company that large.) They issued a statement that said:

“We regret this mistake, and we apologize for the error made in how these calls were placed,” she [BCBS Executive Vice President and General Counsel Maureen O’Connor] said. “We continue to believe that it is important for BCBSNC to take an active role in the health reform debate.”

In July 2010, Consumer Reports publisher reported that BCBSNC is one of 10 Blue plans to post excessive surpluses, even while they continued to request rate hikes. While some surplus is necessary to cover potential losses, North Carolina’s Blue plan far, far exceeded state minimums. The report suggested that the insurance giant should not continue to raise rates while hoarding cash. How much cash?  As of the end of the year, BCBSNC held $1.4 billion in surplus. Makes one wonder why rate hikes were requested at all. (And it puts that $95,000 fine into perspective, doesn’t it?)

Today, BCBSNC announced that it would be refunding $155.8 million to some of its customers. (In case you’re counting, that’s only about 11% of the 2009 surplus.) Why the refund? It’s a result of the Affordable Care Act–part of the Obama Administration’s comprehensive health insurance reforms. Part of what BCBS fought against with its illegal robo calls. So you would think that BCBS would be pretty upset at having to make this refund, right? Not according to the spin!

According to multiple press releases, including WTVD-ABC, the CEO of BCBSNC, Brad Wilson, had this to say:

“Our customers are our top priority and we’ve created a real win for them,” Wilson said. “Our policyholders can expect to receive refund checks from us by the end of the year.”

The article went on to say that in August, BCBSNC requested a 6.97 percent increase for Blue Advantage policies. The Department of Insurance approved a 5.37 percent increase instead. While the spin says that this will “save policy holders $14.5 million,” that’s only if a rate increase is inevitable. It is also accurate to say that compared with no rate hike, this 5.37 percent increase will cost policy holders about $50 million. It’s like the old joke: Honey, I saved $250…it was on sale! Not so funny when the real cost is in the millions of dollars.

I hate to ask impertinent questions, but given BCBSNC’s history, how can their rate hikes continue to be approved? Why does BCBS announce a “refund” on the same day they announce a rate hike? How long does BCBSNC think we’ll continue to take everything they say at face value? Do they think they are fooling us by taking credit for the refund?

Let’s give credit where credit is due–the refunds are due to the Obama Administration’s Affordable Care Act. The same law BCBSNC asked its policy holders to fight against.

Despite the happy-face announcement today, consumers will still face higher-than-ever health care costs. I’m not smiling about that. Are you?

Blue Cross to pay fine, stop robo calls – Triangle Business Journal

Blue Cross and Blue Shield of North Carolina has ‘excessive’ surplus, says Consumer Reports publisher – Triangle Business Journal

Blue Cross to issue refunds, raise premiums

Understanding the Affordable Care Act