As Congress works on overhauling health care, the company with perhaps the most at stake in Montana is Blue Cross and Blue Shield. It's a division of Health Care Service Corporation, which says it's the fourth largest insurance company in America.
Montana Public Radio’s Eric Whitney talked about the changes Congress is proposing with John Doran, a vice president and chief of staff for Blue Cross and Blue Shield of Montana.
This interview occurred before Senate Republicans revised their bill to penalize people who have gaps in their healthcare coverage, and also before the Congressional Budget Office released its analysis of the GOP bill. Here’s MTPR’s Eric Whitney and John Doran of Blue Cross and Blue Shield of Montana.
Eric Whitney: One of the reasons that I've heard from both Senator Daines and Representative Gianforte say the Affordable Care Act needs to be repealed and replaced is because insurance markets are “collapsing” under the Affordable Care Act. Is that true?
John Doran: There have been a lot of ups and a lot of downs. If you look at from Montana's perspective, and you include the Medicaid expansion which was passed in the 2015 legislative session and implemented on January first of 2016, we've had about 120,000 to 130,000 Montanans gain access to health care for the first time. That's a huge positive. And that was a big reason the Affordable Care Act went into place in the first place, was to give those who, for whatever reason, didn't have access to health care coverage, give them that access and give them that coverage.
On the down side, we've also see a lot of instability in the marketplace, it's been a very volatile marketplace. Part of that is because of some of the inconsistent regulation. We've always said the ACA was a very good first step, but it wasn't the end all, be all of our health care system.
And I think if you look at the AHCA, the American Health Care Act that's been released in the House and now the Senate's version, those also aren't going to cure our American health care system. We've been able to work with our federal delegation, with CMS (the federal Center for Medicare and Medicaid Services) and even those on the ground here in Montana, to help shape the law and make it work for Montanans. So, there has been some volatility in the marketplace, but there's also been some tremendous opportunity.
When it comes to the markets “collapsing,” we still have the three insurers in the marketplace that were the original three insurers in 2014. So we haven't seen the loss of insurance companies due to withdrawl from the market, or even just due to the sustainability financially. We haven't seen that yet in Montana. So I wouldn't say that they are collapsing in Montana, but I also wouldn't say that they're sustainable as-is.
EW: Talk to me about the individual mandate, the requirement that most Americans have to have health insurance, a major pillar of the Affordable Care Act. The Republicans in Congress want the individual mandate to go away. What would that mean for your business and for Montana?
JD: You have to have some way to ensure broad participation, and that's the mandate. So you can call it an incentive, or you can call it a stick, the penalty of not having health insurance. But either way there has to be that fine balance between a penalty and an incentive to get broad participation. Because like you said, you need the healthy people in the insurance pool, as well as the sick people, to make it work long term, and so that's that balance, that's what I'm talking about when I consider the need for a mandate, or some way to get all of the people into the marketplace who are eligible, or at least the broadest participation possible, so that you can sustain the marketplace.
EW: Congressional Republicans are offering incentives for people to maintain insurance coverage, instead of a tax penalty for not having it. I asked Doran if he thinks that will result more or fewer Americans having coverage, and maintaining a big enough pool of people to keep premiums from going up. He referenced an analysis of the House-passed bill by the CBO, the Congressional Budget Office.
JD: I think it's pretty clear, the CBO report says that 23 million less Americans will have coverage if that passes over the next 10 years. That speaks for itself.
EW: What the House has passed, in terms of removing the individual mandate and changing the subsidies to help people afford coverage, would that result in net fewer Montanans covered? And changing the subsidies to help people afford coverage, would that result in net fewer Montanans being covered, and what would those changes mean for premiums for people in Montana who are buying health coverage.
JD: It looks like it would result in a net loss of coverage for, I can't project how many Montanans, but certainly quite a few.
And, let's face it, those are the people who need health care the most, right? They've been without health care for however many years, for various reasons; either their employer doesn't offer health care coverage to them, they don't qualify under traditional Medicaid, before Medicaid expansion, or the cost is just prohibitive, and they relied upon emergency rooms to get the health care they need, and as you know, emergency rooms are the highest cost form of health care.
So, there is the potential under these plans that a lot of Montanans would lose coverage, but Medicaid and the individual marketplace are inextricably linked. There are a lot of people in the Medicaid programs that are on a month-to-month basis, so they might roll into a higher income bracket, which would then bump them out of the Medicaid expansion program, where they would need health care coverage under the individual marketplace, and consequently they might bump back into the Medicaid expansion marketplace. So we need to make sure that we are doing everything possible to address those needs, and get the people who need health care coverage the insurance policies or the coverage they need,so they can get the healthcare that they need.
EW: If fewer Montanans have access to health care coverage, both in the private market and in Medicaid, what will that mean for premiums of people remaining in the market? Will my premiums go up or down as a result of those changes?
JD: It really depends on how many people who maybe have qualified for, and are participating in Medicaid expansion decide that they still need health care coverage. If there's no mandate, and there's no incentive for them to buy a health insurance plan, then maybe they won't, and again, that would result in an adverse selection scenario where the people who need health care the most, and typically have the highest health care costs, are the only ones that are in the marketplace, and that results in higher health care costs, higher utilization, and consequently higher premiums
EW: I think a lot of people could say, well, Medicaid expansion is expensive for taxpayers, so if we roll back Medicaid expansion, taxes will be lower, government spending would be lower, but should they expect an impact on their premiums? You're saying their premiums would go up if fewer people have Medicaid?
JD: We may go back to the old days, where they wait until all of their health care needs are at the peak of their sickness, they go to the emergency rooms to be treated for that care, and there's no cost sharing mechanism for the hospitals to absorb that. So what are they going to do? They're going to pass on the cost to all of the rest of us who do have health insurance.
That's the world we lived in before the ACA, not everybody had health insurance. Approximately 20 percent of the people in Montana before the ACA did not have health insurance. That's 170,000 people who, for whatever reason, utilized the emergency rooms as their primary care. And everybody with health insurance ended up paying those costs as they were spread across the hospital populations.
EW: Under the House health care bill, is it realistic to think health insurance premiums in Montana would go down?
JD: If the CBO estimates that 23 million Americans are going to lose coverage over the next 10 years, then I would assume that those Americans are still going to need health care, and they're going to go to the hospitals when they need it the most. And they'll go to the emergency rooms and urgent care centers, and that cost, that's going to be passed on to the rest of us.
EW: I'm told that rural hospitals in particular are in danger of going out of business if the number of people with health coverage goes down. If the Medicaid expansion goes away, that puts rural hospitals in jeopardy. Do you believe that's true?
JD: The Medicaid expansion proposal in Montana was really billed as a lifeline to some of the rural hospitals, and that's partly true. You can't just give uncompensated care and readjust or reallocate those costs to those with health insurance, and expect to continue surviving in this day and age. But a report by the Montana Hospital Association shows that Montana's hospitals' profit margins sunk by 40 percent during the first full year of the Medicaid expansion, according to that report.
So, again, I think we need to make sure we understand fully what the regulatory environment is going to be in the post-ACA world, and that it creates a stability and doesn't further the volatility that we're seeing. Once we have that stability, I think we can answer those questions a lot better.
EW: John Doran is Vice President of external affairs and chief of staff for Blue Cross and Blue Shield of Montana.