KC Health Care Reform

Health care reform has passed. What does this mean?

President Obama was successful in passing significant health insurance reform, as he promised during his campaign for president. Most of the more significant changes in his reform bill will impact health insurers and create new requirements for coverage. It’s important to note that some changes are effective now, while others won’t go into effect for years. Click here to see a full timeline from America’s Health Insurance Plans (AHIP) of effective dates for requirements.

Blue Cross and Blue Shield of Kansas City is pleased that, with the passage of the Senate bill and the House’s reconciliation bill, 32 million Americans without health insurance will be covered. We have long supported several of the key elements now part of health care reform, such as universal coverage through guaranteed issue with a mandate, and bans on pre-existing exclusions. These “new rules” are not new at all to our company. This is how we did business from our inception in 1938 until the late 1970s, when we had to change to compete with investor-owned insurance companies who were allowed to choose which customers they wanted to cover.

Do current Blue Cross and Blue Shield of Kansas City members need to do anything now?

No, Blue KC members don’t need to do anything. Your coverage through your employer or your individual plan is secure with Blue KC. There are some short-term changes in the health care reform legislation that will be implemented over the next several months (see Congress’ clarifications). More significant changes you’ve heard about, such as the requirement that everyone have health insurance, and the requirement that insurers accept anyone who applies, will not be implemented until 2014.

Can I keep my Blue Cross and Blue Shield of Kansas City insurance?

Of course you can keep your Blue KC insurance. Blue KC remains committed to providing excellent customer service to its members, along with a broad portfolio of products and programs to meet the insurance and wellness needs of our members.

Can I keep my doctor?

We don’t see any evidence in current reform legislation that people will need to change their doctors. There is some concern, however, that should reimbursement rates for physicians be affected by reform legislation, fewer people will enter the field of medicine, which could impact access to physicians in the long-term.

What changes can we expect to see right now?

The health care reform bill that passed is very complex, and full of moving parts, however, some elements have become clearer. Several changes will occur, including the following, and we will be ready to make these changes. You can find more detailed information on all short-term changes here.

• Lifetime limits on coverage will disappear
• Pre-existing condition exclusions on children will be banned
  March 29, 2010: there appears to be some confusion regarding exactly what this actually means. We are working to confirm whether this means 1) insurers will be required to issue policies on all children that apply, or 2) if a child is accepted, there will be no pre-existing condition exclusions on that child’s policy.
• Health insurers won’t be able to rescind member policies except for fraud or intentional misrepresentation of a material fact. Please note – this is already our policy.
• Dependents will be able to stay on their parent’s health insurance until they are 26 years old (however, for grandfathered group health plans and grandfathered group insurance coverage, an exception to this requirement is allowed if the dependent is eligible for other employer-sponsored health coverage).
• Preventive services will be covered without member cost-sharing if received from network providers

What changes will we see in coming years?

Several longer-term changes will be implemented in future years, and we’ll keep you apprised of when these changes will occur:

• Guaranteed issue with a mandate – requires individuals to have insurance and requires health insurers to accept anyone who applies
• No pre-existing condition exclusions for anyone
• Health insurers will only be able to rate on age, tobacco use, contract type and geographic area
• State based insurance exchanges will be implemented for individuals and small group employees
• Medical Loss Ratio requirements will be in place for insurers
• Dollar limits on annual coverage will be prohibited

What did the reconciliation bill do?

We are pleased that the reconciliation bill has passed. This bill fixed some of the more significant issues in the Senate bill, such as providing for a stronger individual mandate to encourage both healthy and sick individuals to buy health insurance.

When can members add their adult dependents (through age 26) back on their policies?

This will become effective six months after enactment of health care reform, or with October 1, 2010 renewals or new policies. For individual health insurance coverage, this requirement will be made for policy years beginning on and after January 1, 2011.

Blue Cross and Blue Shield of Kansas City rejected my application for coverage. Now that health care reform has passed, how do I go about getting a policy?

The passage of the Senate bill on health care reform last weekend is just the first step in a long process of implementing health care reform in our country. This question refers to the part of reform called “guaranteed issue,” in which health insurers will be required to sell insurance to anyone who applies, without reviewing health conditions. This part of reform won’t be implemented until 2014. Until that time, the White House has promised Americans that, shortly after reform passed, insurance options (like high risk pools) would be implemented for those individuals who can’t get insurance elsewhere. As soon as we have information about how and where these options might be available, we can share it with you.

When will we know more?

Through its legislation, Congress has laid out a multitude of ways it intends to restructure the health insurance industry. What is still uncertain is how this legislation will actually be implemented. Since the date of enactment, and in the coming months and years, the Secretary of Health and Human Services (HHS) will issue a series of regulations that will continue to clarify the different elements of reform and move the process forward. We’ll continue to analyze the legislation and upcoming regulations and evaluate how they will affect our members and our company. We will keep this FAQ updated in the health reform section of BlueKC.com. Our company stands ready to work with state and federal regulators to make these complex rules work for our customers and our community.

Where can I find more information on health care reform?

Blue Cross and Blue Shield of Kansas City is committed to providing updated information on health care reform to the Kansas City community. This information is available on the company’s Web site, www.BlueKC.com. Click on the Health Care Reform link on the lower left corner of the home page to visit our special section on reform.

What does executive management of large insurance companies in a reform environment think about the most?

The impact of health care reform on health care costs, including the impact of increased taxes on premiums, weighs heavily on leaders’ minds. Minimum Medical Loss Ratios are also on the list. Although Blue KC is currently in line with the proposed MLRs, should a carrier get into a rebate situation, it would be extremely cumbersome on the carrier to give rebates (i.e., send directly to employees, even those no longer working at the company).

Additionally, there are rising health care costs and trying to figure out strategies to bend the cost trend. At Blue KC, provider strategies are being put in place to begin to reimburse providers for quality and outcomes.

What kind of help will small businesses receive to cover their employees?

Effective in 2010, many small businesses and not-for-profit organizations providing health insurance to their employees will qualify for a special tax credit of up to 35% (25% for tax-exempt organizations). This tax credit is designed to encourage small business to offer or continue to offer health insurance to their employees. There are eligibility criteria that must be met, and that information is available at www.IRS.gov, but in general the tax credit is available to small businesses that pay at least half the cost of single coverage for their employees, employ fewer than 25 employees AND pay wages averaging less than $50,000 per year.

The maximum credit (i.e., 35%) is available for smaller employers, those with ten or fewer employees, paying annual average wages of $25,000 or less per year. In 2014, the tax credit will increase to 50% of premiums paid by eligible small businesses and 35% of premiums paid by eligible tax-exempt organizations.

Is the small business tax credit only available through the Exchange or also available to companies who select plans outside the Exchange?

Prior to January 1, 2014, the tax credit will be available to small businesses. After January 1, 2014, the tax credit will be available to small businesses through the Exchange.

What percentage of small employers pay enough income tax to make the tax calculator beneficial?

18% of employers would be eligible for the tax credit, according to McKinsey. However, going through the exercise of determining an employer’s tax credit is worth it to ensure all avenues have been explored – it’s fast, simple and could save a small business money.

Does the small business tax credit apply to sole proprietors, or single person business?

No, the tax credit does not apply to one person business.

Do part time workers count when calculating the tax credit?

Yes, part time workers do count toward the tax credit. Blue KC’s tax credit calculator, powered by H&R Block, can help a small business owner do this calculation.

Is the small business owner’s income figured into the “average annual wage” computation?

No.

Is there a time limit on the tax credit?

The tax credit is available to eligible small business through 2014, and then for another two consecutive years after that. The employer can choose which consecutive years to obtain the tax credit after 2014.

Are non-profit organizations eligible for the small business tax credit?

Yes, tax-exempt organizations are eligible, however they do have a slightly different credit. These tax-exempt organizations are eligible for a maximum 25% tax credit until 2014 and in 2014 that percentage rises to 35%.  However, the amount of the credit for eligible tax-exempt organizations cannot exceed the total amount of income and Medicare (i.e., hospital insurance) tax the employer is required to withhold from employees’ wages for the year and the employer share of Medicare tax on employees’ wages for the year. Companies other than tax-exempt organizations are eligible for a 35% tax credit until 2014, when that percentage rises to 50%.

What do small businesses in particular need to know about how health care reform will impact them?

They need to know how subsidies will affect employers. For example, subsidies are calculated on household income, so employers are going to need to figure household income for employees who earn subsidies. Small businesses also need to know if they should or want to be grandfathered and the ramifications if they are not being grandfathered in future years.

Additionally, these businesses need to know how the exchanges will work in their state which will differ state to state.

When will the short-term reform changes take place?

Short-term changes around health care reform are generally effective for plan years beginning on or after September 23, 2010. Below are some clarifications on certain of these short-term changes:

• Dependent Children: All plans are required to provide coverage to adult children (married or unmarried) until they turn 26 years of age, IF the dependent is not eligible to enroll in another employer-based plan.
• Pre-existing condition limits for children under 19 years old: All plans will cover pre-existing health conditions for a child under the age of 19.
• Preventive Health Services: Preventive services, as defined by federal agencies, will be required to be covered at 100% effective for new plans.
• Emergency Services: Requires equal member cost sharing for emergency services received by non-network providers and prohibits any limitations more restrictive than those imposed by network providers for new plans.

What specific taxes would impact the large group > 50 market (insured) that might cause them to think about not providing health insurance benefits to employees?

There are several, including industry excise taxes passed along in the premium.

What is the actual definition of a “Cadillac Plan?”

A Cadillac Plan is defined as one in which the aggregate value (cost) of certain employer-sponsored coverage (including health coverage, prescription drug coverage, FSA, GRA and HSA contributions, etc., but not including stand-alone dental or stand-alone vision coverage) is greater than $10,200 for employee-only coverage and $27,500 for employee + dependent coverage in 2018 (indexed for inflation thereafter). These annual limits are increased for certain high-risk professions (like firefighters), the age/gender of the employer’s covered workforce, and inflation.

If an employee is offered a voucher from their employer to obtain insurance, does that voucher have to go toward coverage elsewhere, or can they take a cash bonus?

We’re still waiting for clarification from regulations on this subject.

What is the process for obtaining a Wellness Grant from the government? Is there a limit/requirement on the size of the company requesting these grants?

Here’s what we know about the Wellness Grants so far:

• The grants will be conducted for a 5-year period.
• Eligible employers include those with less than 100 employees who work 25 hours or greater per week, and did not have a workplace wellness program in place as of 3/23/2010.
• Additional criteria for “comprehensive wellness programs” will be developed by HHS.
• The “comprehensive wellness program” must be made available to all employees and include the following components:
• Health awareness initiatives (including health education, preventative screenings, and health risk assessments);
• Efforts to maximize employee engagement (including mechanisms to encourage employee participation);
• Initiatives to change unhealthy behaviors and lifestyle choices (including counseling, seminars, online programs, and self-help materials); and
• Supportive environment efforts (including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity, and improved mental health).
• There is an application process that will be developed by HHS.
• WE have been unable to locate an actual effective date although the government appropriated $200,000,000 for these grants for 2011 through 2015. We assume that this will be clarified when the application process is developed by HHS.

Can a group have a waiting period once guaranteed issue takes effect?

Yes, however, it will be limited to 90 days for all group health plans.

What is the time period an employee has to opt out of mandatory insurance by an employer?

We are still waiting for clarification from regulations on this subject.

Will employer-paid premiums be taxable to employees?

The following information cannot be construed as tax advice. For specific information regarding taxes, it is recommended that the employer consult its tax accountant and/or legal counsel. Benefits provided by an employer to employees are not taxable to employees. However, if an employer at any time chooses to give employees money to get insurance in the open market, then yes, that money is taxable to employees.

Does reform affect the Federal Employees Health Benefits program?

In a statement received from the Office of Personnel Management (OPM), it was stated that “while some aspects of this law will not take effect until 2014, there are several major provisions that become effective before that time. Among those is the coverage of a dependent until age 26. The effective date of this provision is the first day of the plan year that is six months following enactment of the law. For the Federal Employees Health Benefits (FEHB) program, that means January 1, 2011. The OPM will take the necessary actions to comply with the new law by this effective date. We will provide additional information on our Web site in the near future about the changes to FEHB plans for the 2011 plan year occurring as a result of reform so that employees and retirees have the information in time for the Open Season, which begins in November.”

Do you think the Kansas City market is very different from other national markets when it comes to reform issues, how reform is accepted or how it will play out over the next several years?

Large group employers are very sophisticated here in KC and have high expectations. As a result, Blue KC has already implemented several elements of reform before they were mandated (e.g. dependent children to 26, no rescissions unless for fraudulent activity, etc.). Many Blue KC clients, both large and small businesses, place a great importance on providing benefits to their employees – they see it as their obligation. Blue KC expects that many of these employers will continue to offer benefits even with reform.

However, there are also many elements of reform that are complex and difficult to understand and employers may take a “let’s see what happens” approach to these elements. Employers drive the market in Kansas City. There are fewer individual policies, so it will be a significant change for the market if it changes to more of an individual focus with the exchange.

This also means that many employees may not be educated about the whole process of buying insurance. Since their employer has done it for them for so long, they rely on their employer to guide them, and without that guidance, employees would likely feel very confused if they needed to purchase insurance on the exchange themselves.

Does Blue KC think, in general, that employers have really been engaged with the issue of reform and what it means to them yet? If not, on what one or two issues do they need to focus?

Employers seem to be aware of reform in varying degrees – some of the brokers are especially good at helping educate clients, along with the carriers. Most carriers have teams of people going through the reform law and regulations in order to be the experts for clients. Employers generally can’t devote these kinds of resources to this issue, so they rely on carriers and brokers for this information.

Depending on the objective of the company, it makes sense for employers to plan now for changes in 2014. They should work with their brokers and carriers to understand how health care reform will impact their actual plan.

What is the future of employer-provided health benefits? Will businesses move to eliminate benefits, underwrite employees seeking individual coverage, send them to the exchanges, and “get out of the business?”

Small businesses will be able to do this in 2014. Large businesses – it will be in 2016/2017. However, there are compelling reasons to maintain benefits for employees.

Blue KC believes many will stay in the business of providing benefits for employees because:

• It will attract and retain top talent in the marketplace;
• It will help employers achieve operational goals, productivity;
• It’s expected that employers will offer employees benefits. Employees are not accustomed to purchasing their own benefits and the confusion of doing so might cause some to go uninsured;
• By coupling wellness programs with benefits, employers further assure their employees stay healthy and productive;
• Health coverage provides employees peace of mind in providing access to care.

In the future, assuming the proposed subsidies remain, there may be some industries that find savings by not offering benefits and driving their employees to the exchange. This is not the case with all companies, and again, the employer should work with their brokers/carriers to find out what situation best fits their company.

Does Blue KC think employers will ultimately be better off providing benefits to employees?

Yes. Providing benefits helps attract and retain top talent. Comparativeness research data shows that employees seek health care information from their health plan first and employer second. Employees want their employer to play a role in providing medical information, including comparative effectiveness information. If employees were referred to exchanges, there would be an overwhelming number of uninformed and confused individual in the exchange market. See this brochure for more details on this subject.

Do you think Congress will significantly increase the penalties for employers who eliminate benefits (now $2000-$3000 per employee)?

This is hard to predict, but probably not.

How will employees’ access to care be impacted if employers eliminate benefits?

Costs will go up, leaving healthy ones to elect to go without. Potentially, only the sick would purchase coverage, which leads to adverse selection which equals even higher costs.

Is Blue KC concerned with the Minimum Loss Ratio (MLR) component of reform?

Yes, of course we are concerned, especially given that we still haven’t gotten any clarification on what can be included as claims expense in calculating MLR. At Blue KC, we know that we need to manage our administrative cost structure more than we have in the past, and we have already begun a stringent process of refining and restructuring our cost structure.

The modeling we have done to date give us enough confidence to be able to commit to our broker commission structure at least through 2011 and possible beyond. We recognize our broker partners play a critical role in our business, and are committed to maintain this relationship.

How will MLR be managed from a block of business perspective?

We expect MLR provisions to come out in late summer, but we know enough now to believe that MLR will be managed at the market segment level.

When would large group employers be able to use the exchange to provide insurance to employees?

Large group employers will not be able to use the Exchange for their employees until 2017, but if they choose to drop employee coverage, their employees can go to the Exchange for coverage after January 1, 2014.

Does Massachusetts pay commissions to brokers on individuals using the Exchange?

Yes, they do, but they pay a flat fee, not a percent of premium.

If an employee leaves their employer group (with at least 50 full-time employees during the prior year), goes to the Exchange and gets a subsidy, does the employer pay the penalty on ALL employees?Yes-

• If such employer did NOT offer coverage and at least one full-time employee receives a tax credit or cost-sharing subsidy through the Exchange, the penalty is:
  • An annual penalty of $2000 per fulltime employee after subtracting 30 fulltime employees from the calculation (e.g., employer with 51 fulltime employees pays $2000 x 21 = $42000).
  • The penalty is calculated on a monthly basis (based on whether coverage is provided, whether one fulltime employee receives a credit or subsidy through the Exchange and on the number of fulltime employees for the month).
• If such employer offers coverage and at least one full-time employee receives a tax credit or cost-sharing subsidy through the Exchange, the penalty is the lesser of:
  • $3000 for each fulltime employee receiving a tax credit or subsidy, or $2000 per fulltime employee after subtracting 30 fulltime employees from the calculation
  • The penalty is calculated on a monthly basis (based on whether coverage is provided, whether one fulltime employee receives a credit or subsidy through the Exchange and on the number of fulltime employees for the month).

What rates will the Exchange have?

Each health plan will determine its own rates to fit into the Bronze, Silver, Gold and Platinum benefit levels of the Exchange.

Who funds the exchange to cover claims, i.e., State, Federal government, carriers?

The “Exchange” will function like purchasing insurance on the Internet. The Exchange will not be funded to cover claims, rather, individual carriers providing the health insurance to people obtaining coverage through the Exchange will cover those claims and take on the risk involved. The Federal government will provide subsidies to individuals who are eligible for them through the Exchange. In a broader scope, insurers will actually help fund the Exchange via a series of health care reform taxes, put in place prior to the Exchange being functional in 2014.

Why do we keep hearing premiums will increase as a result of health care reform?

Despite what you may have heard, insurance premiums are NOT the primary reason health insurance rates continue to go up. In actuality, rates go up as a result of the increasing costs of health care services and procedures. Unfortunately, health care reform as it stands now does not address the issue of rising costs.

It is the belief of many that premiums will go up as a result of reform because the penalties for those individuals who do not buy insurance once it’s mandated are too low. It will be too easy for younger, healthy people to forego health insurance (because they are willing to gamble on the fact they won’t need it) and just pay the small penalty instead. On the other hand, people who are less healthy, or know they will require health care services, will buy or stay on their health insurance. This creates an issue of “adverse selection” where rates must increase in order to cover the added cost of an unbalanced system where there are fewer healthy people and more sick people.

What does “compression rating” mean in reference to rates?

For the small group and individual markets, compression rating refers to the 3:1 rating that insurers will be able to rate to in 2014 and beyond. It allows insurers to rate according to age, but not for gender or health status. Compression rating is not full community rating, where everyone pays the same amount for insurance in any given geographical area. What 3:1 means is that the younger people will end up paying more to help subsidize the older people’s insurance costs.

What impact will health care reform have on rates? And will Blue KC’s second year 11.5% rate cap continue?

At this point, we don’t know how reform will impact rates. We feel relatively certain it will drive rates up, at least initially, due to the extra taxes and fees insurers and drug companies will be forced to pay, the newly mandated benefits in place prior 2014, and the subsidies that will be required for many Americans. Regarding the 11.5% rate cap we have on our small group business, we certainly hope to maintain that guarantee, and are moving forward with that assumption as we plan for 2011.

What impact did reform have in Massachusetts?

Reform did not reduce costs, but it did increase access to insurance. A significant greater number of people in MA are now covered than before reform in that state. And, just as we are seeing with nationwide reform, there are private initiatives being developed and implemented to fill gaps of controlling costs. For example, we are seeing several pilot programs on key elements of current reform, i.e., patient-centered medical homes, accountable care organizations, etc.

Are rates going to go up?

There is concern that increased taxes, as mandated through health care reform, on those already insured and on health insurers, along with a weaker than planned mandate, will increase rates for anybody with insurance. In addition, extra fees imposed on insurers will also be passed along to consumers, also raising rates. These anticipated rate increases won’t happen all at once, but will instead occur over time, as the taxes are implemented, and insurers are required to provide insurance to all comers.

What about people who can’t get insurance right now?

As part of health care reform, a national high risk pool program is in the process of being created and is expected to be in place this summer. This past week, Secretary Kathleen Sebelius sent out a letter to all States, asking if they would be willing to administer this program along side their current high risk pool for residents of their respective States. This national pool would be available to any individuals who have pre-existing health conditions, and have not been covered under creditable coverage during the prior 6-month period. The State of Kansas has already agreed to this, and it’s anticipated that the State of Missouri will do the same. More information on this national high risk pool program will come out of the office of the Secretary of Health and Human Services.

Recent surveys suggest employers believe reform will actually drive up costs. Does Blue KC agree with this? What are some things that could be done to help mitigate rising costs of health care services outside of reform?

Yes, costs will go up as a result of taxes and subsidies. Also, reform doesn’t address rising costs of health care itself. To help mitigate rising costs of health care services, Blue KC is working with providers to develop new models of care that will reward quality outcomes.

What is Blue Cross and Blue Shield of Kansas City doing to prepare for health care reform?

For nearly a year, we have been working with internal task forces to make sure we understand how these proposals will affect our members and our business. With the help of the Blue Cross and Blue Shield Association, we have already modeled the consequences of most reform elements, and we will comply with all requirements. A cross-representational group of senior management has been working since last summer to analyze the impact of potential new requirements on our business and to develop strategies to ensure BCBSKC continues to provide you the coverage you need.

Our newest products, like Blue4U for individuals and AffordaBlue for individuals and small group customers, are designed to provide the benefits at affordable rates. We are also making significant changes to our preventive care coverage and benefit designs to minimize cost barriers to members receiving routine preventive care. Again, these actions are meant to ensure we are ready for the changes health care reform will bring to us and are consistent with our vision and strategy of being Kansas City’s health and wellness leader.

Once 2014 comes, and guaranteed issue is a reality, how will you handle all the new individuals coming onto your books, especially given that you can’t ask any health status questions?

We are developing a wellness strategy for individuals as they come on board to ensure they get the health intervention they need. We’ll be detailing this strategy more as it develops.

What else is Blue KC doing to prepare for reform?

• Transformation Strategy – since the passage of health care reform, the need to effectively transform our business has become crucial. Blue KC’s transformation process recognizes the continued need to lower cost and improve the health of our members. Transformation strategies include:
  • Expanding our Health and Wellness Solutions to support and engage members in improving their health
  • Exploring new provider arrangements and payment models to focus on quality/outcomes
  • Establishing greater connectivity/integration with providers to facilitate information sharing and reduce cost
  • Bringing new products and benefit designs to the market to address affordability issues
  • Adding new tools/services to assist members in evaluating health care options and making informed decisions.
• Changes to Blue KC’s Business Model – In addition to the transformation efforts already underway, we recognize that there will be some significant changes to our business model over the course of the next 3-4 years including:
  • The need to operate in an Exchange market,
  • Continuing to develop new products and evaluate our network and reimbursement structures,
  • Managing to newly defined minimum MLR’s,
  • Developing new wellness programs and solutions to manage “at risk” members, and
  • Complying with new administrative simplification/standardization requirements.

How will provider reimbursement changes impact Blue KC?

We continue to maintain very positive relationships with our providers and are confident this will continue into reform. We will certainly feel increased pressure should Medicare be reduced, but most of our provider agreements are 2-3 year agreements, so we won’t really feel any significant impacts for several years.

What are the top three things Blue KC is doing to prepare for reform in 2014?

Blue KC is focused on strategies that will bring innovative products to the markets, including products for a State-run health insurance exchange. As part of this strategy, Blue KC is further segmenting markets to best meet the needs of the customers.

Blue KC is also working to determine how best to bend the cost trend and is developing long-term strategies around this. Lastly, with Medical Loss Ratio a key element of health care reform, Blue KC is focusing on administration costs.

What does “interim/final” mean in referring to the regulations coming out of Washington, D.C.?

It essentially means that regulation is final, but it also gives rule-makers the option to make any changes they feel may be necessary for further clarification.

Have there been any moves to lower the age for Medicare?

No, at this point, 65 years old is still the age at which one becomes eligible for Medicare.

The Early Retiree Reinsurance Program component of health care reform legislation, however, does offer some help to eligible companies who provide insurance for early retirees. Blue KC will support employers’ as they go through the application process to get funds available to them through this program.

Will brokers get an advance look at the rates/benefits prior to product implementation?

As is our current practice, we’ll preview new products with our broker distribution channel prior to product launch.

What are the chances of repeal of the health care reform legislation?

We do not believe health care reform will be repealed, at least in the near term. Blue KC is moving forward with strategies and plans to continue its market leadership in Kansas City and surrounding areas.

Are insurance companies going to be able to stay in the health insurance business?

Yes, we believe that those insurance companies that continue to offer good service, innovative health solutions and a variety of products to meet the market’s needs will be able to continue to do business. With an estimated 30 million people gaining access to coverage in 2014, we do believe there are opportunities out there for companies that serve their customers well.

Reform initiatives have already been implemented to different extents in various states (most notably Massachusetts). How have these initiatives worked in these states and what does this mean for national reform?

In Massachusetts, they have mandated coverage – in addition, the state controls the Exchange and the market. The problem in Massachusetts is the costs – they’ve spent tens of millions building the program and now running it.

Utah is another state that implemented statewide health care reform. They took Massachusetts’ exchange model and modified it to work for them, spending far less that Massachusetts. They also have no mandates – none for insurance companies, none for employers and none for individuals.

The House (but not the Senate) has approved a bill to repeal health care reform, and there are a variety of Federal courts with different opinions. What other efforts does Blue KC think Republicans and the courts will make to repeal reform?

Blue KC believes Republicans will continue efforts to defund reform. The 2012 election could be critical and the White House might turn, especially if job growth continues in a downward cycle, gas prices remain high and the economy is flat. Regardless, Blue KC is moving forward with its strategies and plans unless told otherwise.

What does Blue KC think the post-reform insurance market is going to look like in five to 10 years?

Changes in the delivery system will be significant. Blue KC is working collaboratively with its providers in Kansas City to tie physician reimbursement to quality and outcomes (i.e., Patient-Centered Medical Homes project). It will most likely look nothing like what is being imagined right now. Blue KC thinks that large employers will continue to provide insurance for employees, for the reasons listed above.

One thing is for sure – health care will continue to be delivered on a regional basis. It’s local, always has been and always will be.