WHY is Blue Cross afraid of the public option?

[Joanne98]

Tue Jun 23, 2009 at 08:38:40 PM PDT

Blue Cross Blue Shield Association and its sock puppet trade association, America's Health Insurance Plans, have finally decided to end their phony charade of "support" for health care reform, and have come out strongly against the public option in Barack Obama's plan. So who are these guys, and why do they think what they provide is so much better than a public option?

Let's take a closer look at BCBS, and the merits of its case against the public option.

southriver's diary :: :: In the "good ol' days," BCBS controlled everything, and if you wanted insurance you took their deal. "Blue Cross" was to health insurance as "Xerox" was to copiers. The harshness to consumers was mitigated somewhat by the fact that the Blues were organized as non-profit companies and were regulated by the states. Today, BCBS controls "only" about 44% of the total market, but considerably more than that in many key places, and it's a much larger market. Moreover, the times have changed. First, the Blues have relentlessly pushed, over the years, to convert to for-profit corporations, and have almost always been successful. Second, state regulators used to have much less on their plates to worry about; as their troubles have increased, their vigilence over health insurance has waned, and the Blues have taken full advantage. Finally, the corporate world is just a different place that it was 25 years ago. For-profits have become more and more rapacious, and the even the non-profits now emulate the ways of the for-profits.

Here's an accurate thumbnail description of the Blue Cross Blue Shield Association today:

The Blue Cross and Blue Shield Association is a federation of independent health insurance companies who license the Blue Cross and Blue Shield brand names. Member companies -- of which there are about 40 -- own the rights to sell Blue-branded health plans within defined regions. The Association coordinates some national programs such as BlueCard, which allows members of one franchisee to have coverage in other service areas, and the Federal Employee Program, which covers more than half of federal government employees, retirees, and their families.

Essentially, therefore, BCBS Association is a franchise operation. It licenses its 40 member companies to peddle insurance and other products under the Blue Cross name -- for a fee of course, which pays the salaries of the Association's 880 employees. It is headquartered in a very handsome building in Chicago, and it operates in all 50 states.

Wellpoint,Inc. is the biggest of the BCBS franchisees, and is a public company traded on the NYSE. It operates in Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, New York (in 10 New York City metropolitan counties and selected upstate counties), Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), and Wisconsin. It is recognized as the leading "consolidator" of the BCBS entities due to its success in "rolling up," or acquiring, one state or regional Blue after another:

Over the past several years, WellPoint has grabbed headlines as it swept through the managed-care industry, converting Blue Cross and Blue Shield plans to for-profit status and rolling them up into what is arguably now the nation's most dominant publicly traded health insurer.

According to Wellpoint's latest proxy statement, it paid it Chairman, Larry Glasscock, $982,764 last year and its CEO, Angela Braley, a whopping $9,844,212. Its top 5 executives were paid a total of more than $20 million. Thanks to the company's generous stock option plans, Mr. Glasscock owns Wellpoint stock worth about $70 million at current market prices; Ms. Braley owns company stock worth about $33 million.

Carefirst, Inc. is the BCBS franchisee operating in Maryland, the District of Columbia and Northern Virginia. CareFirst a not-for-profit, non-stock company governed by a Board of Directors and special statutes regulating its business. Because it is a non-public company, transparency on its executive compensation arrangements is limited. The most informative data that has emerged concerned the company's failed attempt to convert itself to a for-profit entity and sell itself to Wellpoint in 2003, which was rejected by the Maryland Insurance Commissioner because the price for the sale of the company was too cheap. Perhaps the price was cheap because the Wellpoint execs didn't negotiate very hard; they had good reason not to, as the deal included a whopping $120 million payout to Carefirst execs, of which $40 million would have been paid out to the CDEO, William Jews:

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http://www.dailykos.com/storyonly/2009/6/23/745978/-WHY-is-Blue-Cross-afraid-of-the-public-option

[ejpoeta]

1. i keep seeing commercials here for bcbs of wny..... trying to sound like

they are here for their customers. how they want to work with their customers. what bullshit. what baloney. you know who pays for these commercials??? policyholders. so when people wonder why they have their copays and deductibles and bcbs doesn't want to pay for something. .... just know that the money they are paying in premiums to provide for healthcare is going for those commercials instead.