1. What in your opinion will be the main effect of health care reform—the Patient Protection and Affordable Care Act?
I’d say its single biggest effect is that the Medicaid program will see the most significant expansion since the program’s creation. It’s been estimated that around 2 million more Texans will qualify under the new rules. Certain low wage earners and certain small employers meeting average wage requirements may receive subsidies or tax credits to lower the price they pay for health insurance. The price of health insurance for larger employers will increase as coverage requirements increase under the new law, and we’re already hearing that some employers are evaluating whether it’s more cost-effective to continue to subsidize health insurance for their employees or to pay the penalty.
2. What do you see happening to health care costs under the new law?
I’m afraid the cost of health care will continue to increase for all the reasons that costs are increasing today, plus the things in the new law that will increase costs: taxes on medical devices and pharmaceuticals that will flow through as higher claim costs, for example, and the excise tax on insurance companies that will flow through as higher premiums.
3. What effect will the new law have on Blue Cross Blue Shield’s business?
There are a number of administrative changes we’ll need to make to comply with the new law, but the question that keeps me up at night is: What’s the long-term impact of all of this on our customers? The answer is largely dependent on how the overall risk profile of our customer base is impacted, because of several technical changes in the new law that will more tightly regulate how insurance is sold and priced.
4. Insurance companies were often portrayed as the “bad guy” in the debate over health care reform. Later, it was perceived that the industry supported the bill that passed, because it meant more subsidies. Was either perception accurate?
I really don’t know the facts of some of the specific situations portrayed in the media, and I’m not sure anyone does, because federal privacy laws prohibit health insurance companies from commenting on specific situations. Blue Cross Blue Shield plans, which cover about 1 in 3 Americans, have supported a platform for health care reform since the early 1990s.
5. What else, if anything, is important for CEOs to know about this new law?
The question you haven’t asked is how the law will impact all of us in areas far removed from health care. It may force governments and companies to re-prioritize their budgets. As spending for health care increases, governments may have to cut funding for education or other services. And companies will have to look for ways to cut other spending or raise prices for the products and services they provide.