Covering the Uninsured:Blue Plan Initiatives

NGA Governors’ Health Policy Advisors RetreatSeptember 4, 2003

2

Overview

Blue initiatives to keep health care affordableand reduce the uninsured

• Research and efforts to slow healthcare cost drivers

• Specialized, innovative products

• Legislative solutions

3

Growth in health insurance premiumsGrowth in health insurance premiums

Source: Kaiser Family Foundation/Health Research and Educational Trust, Employer Health Benefits Survey, 1999 and 2001; Abelson, t., “Hard Decisions for Employers as Cost Soar in HealthCare,” The New York Times, 2002.

11.0%

12.7%

8.3%

12.0%

8.5%

2.3%

0.8%

3.7%4.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

1988 1993 1995 1996 1998 1999 2000 2001 2002

Healthcare Costs Are Rising

4

Blue Research on Cost Drivers

Blue research assessed the primary healthcare cost driversBlue research assessed the primary healthcare cost drivers

Contributions to Private Contributions to Private Insurance Spending Growth, 2002Insurance Spending Growth, 2002

PhysicianPhysician

Prescription Prescription DrugsDrugs

HospitalHospitalOutpatientOutpatient

27%27%

22%22%

Source: Center for Studying Health System Change, “Tracking Health Care Costs,” 2003

37%37%

14%14%HospitalHospitalInpatientInpatient

5

Efforts to Slow Drivers: Examples

Encourage use of generic drugs

• Consumer education campaigns to increase confidence in generics

– One Plan reports $17M saved from 1% increase in generics use

• Provider outreach, including free samples of generics

6

Efforts to Slow Cost Drivers: Examples

National Launch:June 26

National Launch:June 26

7

Specialized Blue Products

• Low cost uninsured products

• Consumer-driven products

• Special coverage for low-income children

• TAA tax credit products

8

Low Cost Uninsured Products

Many Blue Plans developing new low cost products

• Shaped by local market conditions

Montana Louisiana

DesignedFor

• Uninsured (6 months) low-income individuals

• Small groups not offering coverage

BenefitDesign

• No deductible, normal co- payment• Major medical coverage including Rx • Maximum annual benefit limit

• PPO or traditional indemnity • Higher/separate deductibles for services (in/outpatient) and Rx• Normal co-insurance • Comprehensive coverage including Rx

Community Partnership

• Deep discounts with providers• Reduced broker commissions• Reduced Plan revenues

• Leverage existing provider network

Premiums • Approximately 40% lower • Up to 45% lower

9

Consumer-Driven Products

Many Plans introducing consumer-driven products -- wide range of

approaches

Example

Designed For • Small Employers

Benefit Design • Employer selects group of products for employees to choose (HMOs, PPOs, with choice of deductibles/ co-payments)• Online decision tool helps employees to evaluate options

Funding • Employer contributes fixed amount per employee• Employee can contribute pre-tax dollars towards coverage or uncovered costs

Advantages • Employee has greater choice over coverage • Employee gets tax advantage

10

Special Coverage for Low-Income Children

Some Blue Plans provide subsidized coverage for low-income children ineligible for SCHIP

Blue Coverage for Low Income Children

Designed For • Low-income children ineligible for SCHIP• Income threshold typically 200-250% FPL

Benefit Design

• Benefits vary based on local needs• First dollar coverage (no deductible) with some cost sharing (co-payments) to control utilization

Partnerships • Funded with business and community donations• Providers accept lower fees to reduce uncompensated care costs

11

TAA Tax Credit Products

Blue Plans also developing products qualified for purchase withnew TAA tax credit

TAA Tax Credit Products

Designed For • Individuals eligible for new TAA tax credit

Partnership • Involves close cooperation between Plan and states

Availability • Special Blue product offered in 9 states (2 pending)

Advantages • Utilize 65% credit for health coverage premium for eligible individuals and dependents• Unique advance payment system uses credit to pay premiums as they are due

12

Legislative Solutions: BCBSA Supports

Tax credits for low-wage workers in small firms– About half are uninsured in very small firms

– Several bipartisan bills include these credits

Revisions to McCain-Schumer to speed accessto generic drugs

– Included in Medicare reform bills

Medical malpractice reform

13

Legislative Solutions: BCBSA Opposes

Exempting AHPs from state law/oversight– Increase premiums by 23% (Mercer)

– Increase uninsured by 1 million (Mercer)

– High-risk pool funding evaporates (Groom Law)

– Results in widespread MEWA-like fraud and abuse (Eleanor Hill)

Increasing cost of health coverage with additionalmandates

14

Wrap-Up

Keys to ensuring access and affordability

• Targeted, innovative products

• Partnerships with other stakeholders

• Consumer information/incentives to promote cost-conscious decisions

• Subsidies/incentives for key segments of uninsured

• Avoid problematic solutions and costly new mandates