Blue Shield of CA refusing to sell health insurance in many zip codes

[eridani]

http://www.capradio.org/articles/2014/12/17/after-blue-shield-pulls-out-of-zip-codes,-consumers-see-limited-insurance-options/

Blue Shield of California used to sell policies to individuals in every county in the state, according to the Department of Managed Health Care, one of California’s two teams of health insurance regulators. But by 2014’s open enrollment period, Blue Shield had pulled out of 250 zip codes throughout the state, including four entire counties: Alpine, Monterey, Sutter, and Yuba.

The gaps are particularly felt in the top third of the state, where thousands of residents now have only one choice of insurer if they want to buy a health plan on the exchange.

Blue Shield of California declined an interview with NPR. But in a written statement, the company reported that it’s not selling in certain areas of California because it could not find enough health providers willing to accept a level of payment that would keep premiums low. According to the statement, the company also is not selling in areas where there is no contracted hospital within 15 miles.

Comment by Don McCanne of PNHP: Blue Shield of California has pulled out of 250 California zip codes in the Covered California program (California’s insurance exchange under the Affordable Care Act), citing inability to negotiate low prices with the local health care providers.

Nonprofit Blue Shield of California and for-profit Anthem Blue Cross were the only Covered California insurers in many zip codes in the state. It is ironic that the for-profit Blues plan - Anthem Blue Cross - has continued to serve areas where coverage is more difficult, whereas the nonprofit Blues plan - Blue Shield - has pulled out. So much for the theory that nonprofit Blues plans are public service models while for-profit Blues are primarily profit-making business models. They have become the same animal, with the for-profits leading the way.

Blue Shield blames regulatory guidelines requiring that patients have access to care. By refusing to contract with the local providers, patients would have been required to travel long distances for care - a violation of the Affordable Care Act.

Some might blame Blue Shield for demanding rates that were too low to adequately cover costs, whereas others might blame the providers for demanding rates that provided excessive profits, but the primary blame does not lie with either party. It is the model that uses private insurers as financial intermediaries that is defective and should be blamed.

Contrast that with Medicare, which is a public insurer that administers the rates to be paid. Medicare is not setting rates to ensure that the government is profiting off of the program. Rather it is setting rates to be sure that the health care delivery system is adequately funded so that it will be there when patients need it.

It is true that Medicare rates are not always optimal, but that is because it is only one payer in a dysfunctional, multi-payer system which makes rate setting much more difficult. If Medicare were the only payer for the entire nation, it could set rates with much greater precision, paying legitimate costs and fair margins.

Although the Blues had their day as health insurers serving in the public interest, those days are long gone. It is time for a single payer, improved Medicare for all.

[FreakinDJ]

1. Kaiser has been doing this for decades

I'm sure the provisions written into the law were at the request of Kaiser Permanente. Blue Shield merely found them and decided to exploit them

[Omaha Steve]

2. CA Ins Commissioner needs to jump all over this

OR Gov. Brown.

[Trillo]

3. Citizens are required to purchase insurance or pay a fine.

Blue Shield of California declined an interview with NPR. But in a written statement, the company reported that it’s not selling in certain areas of California because it could not find enough health providers willing to accept a level of payment that would keep premiums low.

There's some interesting asymmetry there. First off, what is the penalty to health insurance corporations for pulling out of markets? Second, what is the penalty to health providers for failing to accept the payments offered?

... the company also is not selling in areas where there is no contracted hospital within 15 miles.

Seems like there are excessive loopholes for insurers. What are the penalties to insurers for failing to sell insurance that correlate to the penalty to citizens for failing to purchase insurance?

[MisterP]

4. it's almost like the insurers wrote the law! but that CAN'T be!