Our Concerns

Blue Cross and Blue Shield of Louisiana has always supported meaningful healthcare reform that would improve the quality of healthcare, rein in costs and extend coverage to all Americans.

As passed, the Patient Protection and Affordable Care Act (PPACA) makes progress in some of these areas. But we have concerns about some of its other consequences. We're committed to joining all healthcare stakeholders to make healthcare reform work. As state and federal agencies write the regulations and develop the details of the new law, we continue to support activities that improve quality and keep healthcare costs in check.

Weak Coverage Mandate

We strongly believe everyone should have health insurance. When more people are gathered together in the pool of policyholders, the risk and costs are spread more broadly among everyone.

The PPACA eliminates preexisting condition exclusions and limits the ability of insurers to charge higher rates due to health status. It also ultimately guarantees coverage to everyone.

The law does impose penalties for those who do not obtain acceptable coverage. However, these penalties are so low – only $95 in the year 2014 – that many people will likely choose to pay the penalty rather than the relatively higher monthly insurance premium.

We are concerned that people will likely wait until they are sick to buy coverage, which will increase premiums for everyone – perhaps to the point of being unsustainable.

Less Access to Care

There is already a shortage of primary care doctors in America. As more people join the insurance market under the new law, this shortage could get worse. There could be longer waits to see physicians and to schedule procedures.

We are encouraged, however, by the new law's provisions to increase training, scholarship support and financial incentives for primary care doctors and general surgeons.

Less Variety in Premium Rates

The only way for an insurance company to stay financially solvent is by taking in enough premium dollars to cover the claims of all customers with healthcare needs. The PPACA does not allow insurers to provide discounts currently available to young males age 20 to 40. As a result, the premiums for these customers will likely increase dramatically. If young males have to overpay for their insurance, they may decide not to purchase it altogether. This would cause everyone's rates to increase, as young males tend to subsidize other, higher-cost customer segments.

Cost Shifting from Medicare/Medicaid

While at least 15 million people are expected to be added to Medicaid under the law, much of the financing for the law comes through cuts to Medicare funding ($460 billion in the first 10 years).

Doctors and hospitals are already paid below cost for the services they provide to Medicare and Medicaid patients. Many doctors and hospitals recoup these losses by shifting the costs to private health insurance companies like Blue Cross, charging more to insured patients than they would otherwise. These costs must then be passed on in premium increases.

Blue Cross has always worked hard to negotiate fair and reasonable provider rates on behalf of our members. But we now expect the pressure to raise reimbursement rates to increase in the coming years. In fact, insurers across the nation are already seeing unprecedented requests for higher rates from network providers.

If insurers try to hold the line in order to keep premiums affordable for customers, some doctors and hospitals may choose to leave their networks instead of accepting lower rates. This increases out-of-pocket costs for customers.

Law Does Little to Address Costs

We are concerned that the PPACA does little to address the underlying cost drivers of healthcare. It's well known that the cost of premiums is determined by the cost of healthcare. When healthcare costs go up, premiums have to go up to cover those expenses.

• The primary drivers of healthcare costs are the number of services that consumers require added to the prices of hospital and physician services. Healthcare reform legislation that ignores the true drivers of healthcare costs will never be able to lower those costs.
• Massachusetts passed state healthcare legislation in 2006 that is similar in many ways to the act Congress passed. Like the PPACA, the Massachusetts law does not address the rising cost of medical services. And because its mandate is weak, people can wait until they're sick to buy insurance. As a result, premiums rose 32 percent in Massachusetts. But the state's insurance commissioners refused to allow most of the premium increases that the health insurers asked for. These health insurers are being asked to operate at a loss – a situation that can last only so long before they fold. We fear that a very similar situation could occur nationwide.

Increased Costs to the Healthcare Industry

The law adds the following taxes and fees on the healthcare industry:

• In 2011, an annual fee was charged to the pharmaceutical manufacturing industry, allocated according to market share.
• In 2013, an annual fee becomes effective on insured and self-insured plans to fund the patient-centered outcomes research trust fund (also created by the law).
• A sales tax will be added to certain medical devices in 2013. (Does not include items such as eyeglasses, contact lenses and hearing aids.)
• An annual fee will be charged to health insurers beginning in 2014, allocated across the industry by market share. This fee will likely amount to millions of dollars per year.
• While consumers are not charged these fees directly, it is likely that their effect on healthcare costs will be passed on to the consumer.

This information has been compiled from a variety of sources. Please note that interpretations may vary, and you should consult your attorney and/or tax advisor for more specific information. New and existing state laws may impact many of these provisions as well as future federal and state regulations. Please also note that the new law allows for "grandfathering" of certain health plans, making those plans not necessarily subject to portions of the new law.