Local Insurers Eye Reform Fall Out | What could a public option mean to Massachusetts?
There are a lot of businesses keeping a watchful eye on the nation’s capital as the debate on federal health care reform continues.
But few have as much at stake as insurers. And even though Massachusetts implemented its own version of health care reform in 2007, the state’s insurers are facing uncertain times.
“It’s very high anxiety,” admits Janis Liepins, the vice president of market research and product for Worcester-based health insurer Fallon Community Health Plan. “There’re a lot of things that keep us up at night, but it’s the uncertainty more than anything.”
The story is much the same at Wellesley-based Harvard Pilgrim Health Care, according to Vincent Capozzi, senior vice president of sales and customer service. And although what health care reform shakes out to be may be up in the air, Capozzi is predicting there will be some sort of legislation passed by year’s end or by early 2010 at the latest.
“The Democratic party and particularly the president do not want this to get delayed by any long period of time because by mid-year 2010, election politics will start to take over,” he said.
Predicting The Future
For Harvard Pilgrim, Massachusetts health care reform hasn’t significantly impacted their membership numbers.
“We’ve seen a slight increase, but we’ve also seen migration from different distribution channels... Net net there’s been a little bit of growth,” he said.
But what, exactly, will federal health care reform mean in the Bay State?
Well, that depends on the details, of course.
Take, for example, the hotly contested public option. If federal health care reform includes a health insurance mandate for all citizens, and also establishes a publicly run insurer, will it drive the FCHPs and Harvard Pilgrims out of business? After all, Massachusetts has lived with a quasi-public option known as Commonwealth Care for the last two years, and insurers are still in business.
The difference in Massachusetts, is that the “public option” is not completely public. Private insurers, including FCHP, contract with the state to provide the lower cost plans for the previously uninsured.
But the public option being debated in Washington is most often described as a government run and controlled entity. And the impact of that type of entity on insurers depends on the public option’s structure.
“One basic thing that people have to understand is what rules is the public option playing under?” Liepins said. Some proposals have called for the public option to pay providers, like doctors and hospitals, what Medicare pays. And because Medicare generally negotiates much lower rates than private insurers, such a structure could provide unfair competition to the private sector.
And while the prospect is certainly a concern for Harvard Pilgrim and all insurers, Capozzi predicted that the likelihood of a public option being passed is very slim.
What Capozzi is expecting from reform is some expansion of Medicaid, insurance reform (prohibiting pre-existing conditions), minimum level of coverage requirements, some form of an individual mandate and a connector or an exchange to help the uninsured find coverage.
Of course, the question is, how will these reforms be funded?
“The bottom line is who is going to get taxed and by how much,” Capozzi said.
There may be some sleepless nights for insurers, but Liepins does find some comfort in the fact that reform, once it’s passed, will take time to implement.
“Even though there are some versions of legislation that are more serious of a concern, many wouldn’t take affect for a couple of years,” he said.
“But we want to make sure first and foremost whatever comes out is what’s best for our members.”
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