Brad Wilson, president and CEO of Blue Cross Blue Shield of North Carolina, wasn’t bashful discussing what’s driving up health insurance costs including the Affordable Care Act during the Charlotte Chamber’s annual Health Care Summit.
Health-care reform has improved access to care but is not perfect, Wilson says.
Blue Cross Blue Shield covers 3.9 million customers in the Tar Heel State. Of those, roughly 500,000 gained coverage through the health-insurance marketplace as part of the Affordable Care Act.
Those ACA customers are less healthy and continue to utilize more expensive medical services than anticipated, with $1.3 billion in medical claims in 2015, Wilson says.
That’s resulted in more than $400 million in losses over the last two years tied to the ACA business lines.
“Those kind of losses are unsustainable,” Wilson says. “Something has to change.”
The risk pool needs to be bigger. There also need to be fewer special enrollment periods to keep people from jumping in or out of the system as needed, he adds.
But the challenges facing Blue Cross Blue Shield aren’t solely linked to the Affordable Care Act, Wilson says.
Insurers are dealing with rising costs at a time there’s an increased focus on quality, he adds. “We need to think about ways we can all work together to address the issue of rising costs.”
Otherwise future generations face “irreparable harm” and won’t be able to afford medical procedures, prescription costs and other services.
By 2020, health care costs are expected to account for 20% of the gross domestic product up from 17.5% in 2014.
Those issues reach beyond health insurance premiums, which will continue to rise as medical spending does. Premium increased are a reflection of the cost of goods and services, he adds.
“There’s a list of reasons why health care costs continue to go up,” Wilson says.
North Carolina has 56 legislated mandates that require coverage, with more under consideration in Raleigh. If all are approved, the Tar Heel State will have the largest number of mandates in the nation.
Rising prescription costs are another driver of increasing health care premium. Specialty drug costs rose 34% last year. “That cost is going to show up somewhere in the system,” he says.
Wilson also says consumers are too far removed from the cost of care and there can be vast differences in the cost of procedure based on location. For example, knee surgery for an ACL tear costs $9,453 in High Point. In Winston Salem, the same procedure costs, $19,534.
“Ask yourself the question why,” Wilson says. “Our health care system still receives paying for quantity rather than quality.”
Date: May 23, 2016