The dominant force in North Carolina health insurance for decades, Blue Cross and Blue Shield of North Carolina has even more influence as the only remaining option for most Affordable Care Act enrollees after rivals pulled out of the controversial program last year. (Cigna also offers ACA plans for 2017 in five Triangle counties.) Brad Wilson’s task is to balance the role of insurer of last resort while improving the not-for-profit company’s finances: It basically broke even in 2015 after losing about $51 million in 2014. Last year’s results haven’t been disclosed.
CEO, BLUE CROSS AND BLUE SHIELD OF NORTH CAROLINA
When Wilson became CEO in 2010, Blue Cross had total revenue of $5.2 billion and 3.7 million customers. Seven years later, its customer base has expanded by 200,000, or 5%, while revenue soared by 50% to more than $8 billion. Escalating health care costs is a national concern, and few have more impact than Wilson, who has degrees from Appalachian State, Duke and Wake Forest universities.
Can you explain why the ACA is such a problem for Blue Cross and other insurers?
In 2015, participants in the ACA made up less than 10% of our total customer base, about 425,000 people, and they had medical claims of $1.3 billion. We lost $400 million on the ACA in the last two years. It doesn’t take an MBA to figure out those kinds of numbers aren’t sustainable.
Given the losses, why did you stay in the program?
We realized that if we couldn’t figure out how to stay in, there would be 600,000 to 700,000 people in the individual market that wouldn’t have an option for next year. We take our mission seriously of solving hard problems so we can serve all of North Carolina.
The easy decision would be to follow the lead of our competitors. But we worked hard with the N.C. Department of Insurance and folks in Washington to do the best we can so North Carolina has an option. We can all debate how attractive it is, but having an option is better than none.
We are financially healthy, and we will figure it out.
What needs to be done to fix the Affordable Care Act?
Here are four things that would help immediately while our leaders are figuring out the congressional plan. These moves can be done administratively while change is being discussed by Congress:
First, we need to enforce more effectively the mandate to require health care coverage and grant fewer exemptions to that mandate.
Second, we should tighten the special-enrollment period requirements so that there are fewer exemptions allowed. There are too many enrollment periods, which destabilizes the whole marketplace.
Third, shorten the current 90-day grace period requiring people who receive government subsidies to pay their premiums. Too many people wait too long to pay or don’t pay at all.
Fourth, we should pre-fund programs that are in place to stabilize the insurance market.
Some enrollment rules were tightened last spring, which helped. But we need to do more. My hope is that the new administration would take these steps.
The challenge for us in the country and North Carolina is whether insurers will continue to exit the market in 2018 like they did in 2017 and what would cause them to stay or leave. If we did those four things, more companies would stay, and it would help stabilize the market.
Beyond those ideas, do you favor major changes?
There needs to be fundamental reform of the program. Whether you call it repeal and replace or whatever, Congress must take action because the program as designed is fundamentally flawed.
Rates for ACA enrollees are up 24% this year. [Federal subsidies have also increased, so many ACA enrollees are seeing little change in out-of-pocket costs.] What is the outlook for 2018?
We believe that the rates we’ve set are adequate to keep the market, our company and our customers stable for 2017. I can’t forecast 2018, but past trends are a suggestion of what will happen unless there are changes.
Rates for businesses with more than 50 employees that we fully insure have increased from 6.5% to 12% annually over the last four years. We’d like rates to be dramatically lower, but they reflect the cost of care.
How does being the only statewide ACA insurer affect your business?
We knew that to remain in the program we had to have a rate that gave us reasonable assurance that we aren’t going to lose money. We believe the new rates are doing that.
We also had to do an assessment to make sure we were able to handle an influx of 200,000 to 250,000 customers left behind by Aetna and United Healthcare [which pulled out of the ACA program in North Carolina.] In the past year, we’ve hired an additional 1,100 customer-service representatives to expand our capacity, mostly driven by the ACA population. But when one part of a business is taking a disproportionate amount of time and expense, that isn’t healthy.
GOAL FOR 2017
My personal goal is to focus more on work-life balance. 2016 was a tough year, personally and professionally. It is time to recalibrate and bring more balance into my life. So far, so good!