It was touch and go there for a bit, but Blue Shield of California and Sutter Health resolved their differences and signed a new two-year agreement that will keep Sutter hospitals and medical centers in Blue Shield’s provider network. The public jousting was palpable and thankfully short-lived. Coming to an agreement before the end of the open enrollment (February 15) means many can check insurance off their to-do list, for a while anyway.
These negotiations are quite a contrast from what they were in the early days of my career. In the 80’s and 90’s, the insurance companies held greater leverage over providers and hospitals and were the ones dangling the carrot. “If you don’t accept our fee schedule for medical services, you won’t be in our network and our membership will seek treatment elsewhere.” This allowed insurance premiums to remain relatively low, stable, and perhaps unrealistic.
Over time, as medical groups consolidated and hospitals were gobbled up by large hospital chains, the roles reversed; the providers dangled the carrot, “accept our fee schedule or we’ll take our chain of hospitals or medical groups out of your network and you can deal with your disappointed membership”. This in part led to years of double digit premium increases to cover these higher fees to maintain the provider network. Now we see a new trend, carriers going to “skinny” networks to be price competitive.
Obamacare has not lowered healthcare costs but shifted the burden to a smaller segment of the population. CoveredCA (California’s version of Obamacare), has increased the pool of Medi-Cal enrollees to over nine million (paying little or no premiums), and provides subsidies to over 800,000 others. Shouldering this massive program are those without access to group insurance and who have income over 400% of the federal poverty line. The bulk of this pool is not the very rich either, but those with moderate incomes.
For example, a fifty-year-old SF resident making $50,000 (AGI) does not qualify for assistance through CoveredCA. A family of four with forty-year-old spouses making $96,000 (AGI) would not qualify either. Premiums for these two cases for Bronze level coverage (catastrophic plan), would be on average $475 per month and $1,016 per month, respectively. That’s more than 10% of personal income going to health insurance premiums for catastrophic coverage.
What does all of this mean? It means Health Care Reform is not over. A Republican House and Senate continue to wage war on Obamacare but have yet to offer a logical and coordinated strategy. In California, Single-payer health care is lurking in the background with supporters ready to move if carriers, providers, and drug companies can’t control costs.
In the meantime, we consumers can be the catalyst for meaningful change. With a greater understanding of the carrier and provider relationship we can demand greater accountability and transparency from both. With more transparency in the marketplace competition will follow and will help to control costs and increase quality of care.
Next blog, a personal experience of our health care system gone wild.