A Response from Blue Cross

by Jonathan Cohn | October 16, 2009

On Thursday,  Jeff Smokler of the Blue Cross Blue Shield Association contacted me to defend the organization's study, which I had criticized as "fishy." Actually, to be clear, he had contacted me late on Wednesday, a few hours after I'd try to reach him and some of his colleagues. But I wasn't able to get back in touch with him right away, so we weren't able to speak until yesterday.

My primary criticism, as you may recall, was that the study was deliberately misleading in its presentation of the information. Along with an accompanying letter sent to Congress, the study highlighted predicted that reform would produce some scary premium hikes, noting only as an afterthought--in the text of the report itself--that for many of these people subsidies would mitigate some or all of the increase, to say  nothing of the many people who got insurance they could not previously obtain at all.

In addition, I noted, the report did not take account of other measures that would actually translate into reduced costs, such as the availability of a "young invincible" policy--basically, a stripped-down catastrophic policy that young people could buy at much lower rates--as well as the efficiencies of insurance exchanges and long-term drivers of cost savings. Another element, which I didn't mention originally but belongs on that list, is a provision that would let young adults stay on their parents policies until they turn 26.

In the course of a respectful back-and-forth, Smokler made two basic points. First, he said, BCBSA hadn't hidden those facts. The report made clear it was leaving out a few things. Second, he said, many of those factors really wouldn't have had a huge effect anyway, according to calculations by the accounting firm Oliver Wyman.

In the item, I also mentioned that sources in the administration and Capitol Hill have been saying, for months, that BCBSA had been among the lobbying groups most hostile to health reform. I quoted one senior Senate staffer calling them "Dr. No." Smokler took strong exception: "I fundamentally disagree with the premise that we haven't been offering solutions." He went on to note that BCBSA had some time ago publicly endorsed reform, including the establishment of guaranteed issue (that is, giving insurance to anybody, regardless of preexisting condition) and modified community rating (that is, limiting the variation of premiums based on medical condition).

Towards the end of the conversation, Smokler brought in Kris Haltmeyer, the group's executive director of policy. He made similar points, although he also acknowledged that the report could have provided a more complete picture by actually showing the offsetting impact of the subsidies and other efforts to reduce sticker shock, particularly for young people:

We really did try to put out something that was honest, something that we would completely stand behind. Were we to do it again, because of the reaction we had, we would have been clearer about what percentage of people would have been in the grandfathered pool [people allowed to keep their own insurance policies], the subsidy eligible pool, and in the non-subsidy eligible pool. We had numbers but we should have had a table breaking that out.

Haltmeyer said BCBSA would be putting out a more complete set of numbers later. I take him at his word. And while I stand by what I wrote and said on Wednesday--that this was clearly an effort at selective presentation of the facts, in order to stall reforms that would hurt BCBSA's bottom line--I should also reiterate something I wrote in that original item. This report was far less misleading than the one the America's Health Insurance Plans (AHIP) put out a few days before. And, like AHIP's report, it also made some very good points, particularly when it comes to the importance of a strong individual mandate.

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