Let’s start with this headscratcher. Two 64 year old women in good health and with no history of persistent claims are “individual plan” customers of Blue Cross/Blue Shield. One lives in downtown Boston and the other resides in a small town in Connecticut. Blue Cross/Blue Shield (BC/BS) in Connecticut charges one woman $1,062.60 per quarter (almost double the 1988 charge) and BC/BS in Massachusetts charges the other woman $537.03 per quarter. If anything, health care prices in Boston are higher than in Connecticut, much less small town Connecticut.
Now turn to Washington, D.C., where a family of four can pay $15,000 a year to BC/BS for full coverage or where a person of good health in his/her mid-Fifties can pay $500 a month or where two persons (spouses) can pay $500 a month for both of them.
Starting to sound irrational . . . no rhyme or reason? Well, welcome to the world of the Blues where 94 million Americans are covered by 73 separate BC/BS, non-profit companies. Fourteen of these Blues are in serious financial trouble — one of them, in West Virginia, went bankrupt in 1990. The prices charged by most Blues have been skyrocketing in the past decade at an accelerating pace. And so have the scandals and mismanagement.
This month the Senate permanent subcommittee on investigations has been inquiring into the performance of Blue Cross/Blue Shield of Maryland. While suffering large financial losses in recent years, Maryland BC/BS kept raising salaries of top executives, gave them country club and yacht club memberships, rented a $75,000 annual Orioles box and paid $182,000 to send some people to the 1988 winter Olympics in Calgary, Canada.
The insurer lost $120 million from profit-making subsidiaries in the past ten years. BC/BS’s own treasurer, Rosemarie R. Schwartz, told the Senate Subcommittee that the company overvalued its assets by $80 million. It then received approval from the patsy Maryland insurance regulators, and, in the treasurer’s professional opinion, presented a rosier, inflated picture to a worried public. Above all, the company’s paper surplus had to be shielded with such deception.
In contrast to the reassurances of top BC/BS executives, Maryland Insurance Commissioner, John A. Donaho told the Subcommittee that the company was “barely solvent” and operating out of his control.
Within the context of millions of Americans. paying more for health insurance than for food, paying increasingly larger percentages of their insurance health care costs, suffering from larger deductibles and exclusions such as pre-existing conditions, and fearful of changing jobs due to the preexisting condition hammer, even the politicians are talking about the need for national health insurance in their otherwise sloganized campaigns.
But few of the numerous bills in the Congressional hopper face up to the need to control prices, advance quality control and emphasize preventive sickness services (tobacco, alcohol, diet, side-effects of drugs, malpractice frequency in addition to billing fraud). The legislative proposals that come closest to these goals are available to you from the offices of Senator Paul Wellston and Cong. John Conyers.
Critics of BC/BS over the years have taken the Blues to task for not monitoring wasteful, duplicative hospital and physician services, facilities and practices. Pennsylvania Insurance Commissioner Herb Denenberg in the Seventies tried to do something about this problem. He issued some hospital monitoring requirements which the Blues mostly ignored.
Granted, the Blues have been squeezed by commercial insurance companies that take away some of the lower risk customers — a practice called “cherrypicking” — and leave the Blues with a larger proportion of higher risks.
But the bigger problem is the hierarchial, entrenched, BC/BS bureaucracy, paying its chief executives nearly a million dollars a year, unaccountable to its consumers or regulators and heavily under the influence of organized medicine — the hospitals and physicians.
For example, the BC/BS of the Washington, D.C, area set up 42 for-profit subsidiaries, 16 of which are offshore companies. All together they have lost much money and caused higher insurance premiums to be charged.
ABC’s Nightline program reported the other evening that in Florida, BC/BS, employees were told to make incoming claims disappear because the system couldn’t handle the volume.
In New York, the giant BC/BS plan, Empire New York, is about to go broke. The state legislature enacted a law, effective in April 1993, that requires all commercial insurance companies to accept anyone who needs health insurance, regardless of health status, who can pay for it.
The tidal wave of annual price increases for health care and the riptide of massive fraud, waste and malpractice are overwhelming honest healthcare specialists and the modest reforms that are in turn very modestly enforced.
In 1970, U.S. health care costs totalled $67.2 billion or 7 percent of the gross national product (GNP). Last year the costs reached nearly $750 billion or 13 percent of the GNP. In her 1974 book, Blue Cross what Went Wrong?, Sylvia Law was concerned that “in 1950 per capita health expenditures were $79; in 1960 they were $145; and in 1970 they were $324.” This year they will exceed $3000 per person. Even when adjusted for inflation, it is clear that this spiral cannot continue at this pace. Only organized citizens will make the necessary changes happen.