Blue Cross to take the field … maybe the whole field under Obamacare

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Blue Cross and Blue Shield is hoping to capture the lion’s share of new health plan enrollees through state and federal exchanges under Obamacare, and will succeed at least in part due to the growing reluctance of other major insurers to jump in.

According to a Friday report by Kaiser Health News, chiefs of the country’s largest and third largest insurers, UnitedHealth Group and Aetna, declined to participate in a closed White House meeting in April where President Obama discussed exchange implementation with health plan CEOs.

UnitedHealth Group had originally planned to sell in as many as 25 state exchanges has pulled back to 12, taking a cautious “watch and see” approach, according to CEO Stephen Henmsley. Likewise, Aetna CEO Mark Bertolini said that it plans to offer individual exchange polices in 14 states but may reduce it if the states look unprepared or unprofitable, and has already decided to stop selling policies in California, the most populous state.  Cigna will sell plans in just five states to not spread itself too thin.

Insurers fear that sick clients will sign up first, bringing disproportionately high claims in the early years — a fear that is justified based on costs that dramatically exceeded expectations within the temporary “high risk pools” established under Obamacare to cover the chronically ill until 2014.

Health plan reluctance is also due to concerns over technology, according to insurance consultant Robert Laszewski, as well as the fear that Democrats will blame insurers if the government-run exchanges suffer technical failure or run into other problems.  To Laszewski, this hesitance is sudden, and contrary to what everybody — including the companies — assumed would be active participation in a lot of exchanges.

Enter Blue Cross, the loose federation of nonprofit and for-profit health plans, who already cover the most members of any plan in a large majority of states.

To protect this turf and to capture as many healthy customers as possible, the Blues are getting aggressive.   Not only will they offer plans in nearly all state exchanges, but they are taking on the role of advocate and cheerleader for exchanges themselves, working within communities to spread marketing and awareness materials to prospective clients.

In Florida, this means doubling the number of call center employees and the opening of retail centers and temporary storefronts in key neighborhoods; and likewise in Texas and Louisiana and elsewhere, the Blues are educating and recruiting exchange customers even without cooperation from the state. 

 “In campaign terms, it’s a get-out-the-vote type of approach,” said Michelle Riddell, vice president of community investment for BlueCross BlueShield of Texas.

Yet if other insurers don’t follow suit, the point of the exchanges — creating competition and competitive pricing — could be defeated. 

For example, to date, Blue Cross is the only company to publicly declare it will offer multistate plans — meant to provide a wider mix of alternatives — and it appears these plans will be clones of the standard plans they’ll be selling within states. Not exactly variety there.

And particularly if competition is lacking, serious concerns remain regarding the affordability of such plans.  In Iowa, Wellmark Blue Cross and Blue Shield just hiked individual and small business premiums by more than 12 percent, leading to outcries and a pullback by the company to limit increases to 6 percent, just enough to offset new fees and taxes required under Obamacare.